The Financial Reporting Council has published guidance for companies on disclosure of risks and other reporting consequences arising from the emergence and spread of coronavirus (COVID-19).
The regulator is also discussing with audit firms whether the virus affects their ability to review component audits in China and the consequences for delivering timely audit opinions.
By law, companies are required to disclose principal risks to their business. The FRC is advising companies to carefully consider what disclosures they might need to include in their year-end accounts, which will be particularly relevant for companies either operating in or having close trading associations with China.
The extent of the risk and the degree to which it might crystallise depends on companies’ specific business circumstances. These could include, for example, extensive operations or manufacturing in China, with consequential staff shortages and production delays.
Depending on the extent to which the virus spreads outside China, other companies could also become affected.
An FRC spokesperson said: “Given the potential for rapid spreading of the virus, required disclosure will likely change over time as more information about the epidemic emerges.”
• The ICAEW’s Audit & Assurance Faculty has published practical ‘Know-how’ guidance to help group auditors understand the steps they need to take to navigate the threat presented by coronavirus.