UK companies have to spell out financial impact of coronavirus in annual reports: Britain’s financial watchdog

On Tuesday, Britain’s accounting watchdog stated, companies should disclose the financial impact that China’s coronavirus will have on their businesses, if any.

Annual reports for 2019 are due and companies are required by law to disclose the main risks and uncertainties to their business in a meaningful and timely way, said the Financial Reporting Council in a statement.

“We encourage companies to consider carefully what disclosures they might need to include in their year-end accounts relating to these events,” said the FRC.

Risks posed by China’s coronavirus could include extensive production delays and/or staff shortages.

“Additionally, companies which might not have a presence in China but have significant trading links or global supply chains dependent on Chinese-manufactured goods will need to consider their disclosures if their businesses face possible disruption,” said the FRC.

Companies will also need to revise valuations of assets and liabilities, perform additional impairment tests, and check whether leases have become onerous.

Audit firms will also have to assess the impact of the outbreak on UK-listed groups which have Chinese subsidiaries, said the FRC.

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