UK regulator the Financial Reporting Council (FRC) has issued consolidated COVID-19-related guidance for companies that highlights the areas boards should focus on to maintain strong corporate governance and the issues they should consider when preparing annual and other corporate reports.
On corporate governance, the FRC said boards should:
- Develop and implement mitigating actions and processes “to ensure that you continue to operate an effective control environment, addressing key reporting and other controls on which you have placed reliance historically but which may not prove effective in the current circumstances”;
- Consider how you will secure reliable and relevant information, on a continuing basis, “in order to manage the future operations, including the flow of financial information from significant subsidiary, joint venture and associate entities”; and
- Pay attention to capital maintenance, “ensuring that sufficient reserves are available when the dividend is made, not just proposed; and sufficient resources remain to continue to meet the company’s needs”.
In addition, the FRC’s guidance encompassed areas such as risk management and internal controls systems, dividends and capital maintenance, the viability statement, strategic report, and financial statements.
The FRC also posted guidance for auditors carrying out audit engagements that may be affected by COVID-19.
— Oliver Rowe (Oliver.Rowe@aicpa-cima.com) is an FM magazine senior editor.