CRR Case Summaries and Entity-specific Press Notices
The FRC publishes, on a quarterly basis, summaries of its findings from recently closed reviews that resulted in a substantive question to a company (‘Case Summaries’). In addition, it publishes the names of companies whose reviews were closed in the previous quarter without the need for a substantive question. No Case Summary is prepared for such reviews.
Case Summaries, which are available for cases closed in the quarter ending March 2021 onwards, are included in the table below. As, currently, the FRC is subject to existing legal restrictions on disclosing confidential information received from a company, the Case Summaries can only be disclosed with the company's consent. Where consent has been withheld by the company, that fact is disclosed in the table.
From March 2018 until March 2021, the FRC published the names of companies whose reviews were closed in the previous quarter but did not prepare Case Summaries. However, on an exceptional basis, specific cases may be publicised through entity-specific Press Notices, which can also be found in the table below.
The FRC’s reviews are based solely on the company’s annual report and accounts (or interim reports) and do not benefit from detailed knowledge of the company’s business or an understanding of the underlying transactions entered into. They are, however, conducted by staff of the FRC who have an understanding of the relevant legal and accounting framework. The FRC’s correspondence with the company provides no assurance that the annual report and accounts (or interim reports) are correct in all material respects; the FRC’s role is not to verify the information provided but to consider compliance with reporting requirements. The FRC’s correspondence is written on the basis that the FRC (which includes the FRC’s officers, employees and agents) accepts no liability for reliance on its letters or Case Summaries by the company or any third party, including but not limited to investors and shareholders.
Key
- Only a certain number of CRR’s reviews result in substantive questioning of the Board. Matters raised may cover questions of recognition, measurement and/or disclosure.
- CRR’s routine reviews of companies’ annual reports and accounts generally cover all parts over which the FRC has statutory powers (that is, strategic reports, directors’ reports and financial statements). Similarly, CRR’s routine reviews of companies’ interim reports will generally cover all information in that document. Limited scope reviews arise for a number of reasons, including those conducted when a company’s annual report and accounts or interim report are selected for thematic review or reviews that have been prompted by a complaint. In accordance with the FRC's Operating Procedures, for Corporate Reporting Review, CRR does not identify those companies whose reviews were prompted by a complaint.
- The FRC may ask a company to refer to its exchanges with CRR when the company makes a change to a significant aspect of its annual report and accounts or interim report in response to a review.
- Case closed after 1 January 2021 but performed under operating procedures that did not allow for the publication of Case Summaries.
- From the quarter ended June 2023, the FRC started identifying the auditor of the annual report and accounts, or the audit firm that issued a review report on the interim report, that was the subject of the CRR review. This information was also back-dated for closed cases publicised from the quarter ended September 2022. Cases marked N/A relate to those published prior to September 2022 or interim reviews that did not have a review opinion.’
Case Summaries
CRR Case Summaries and Entity-specific Press Notices (Excel version)
| Entity | Scottish Mortgage Investment Trust PLC |
|---|---|
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | Secure Trust Bank PLC |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2024 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice | N/A |
| Entity | Shell plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Impairment of property, plant and equipment We asked the company to explain how changes in conditions towards the end of 2022, including market interest rates, affected the determination of discount rates used to estimate the value in use of property, plant and equipment. The company described its approach to considering market movements during the year and their implications for the rate of return expected by investors from assets with the same risk profile as those under assessment for impairment. This included exercising judgement as to when increasing market rates represented an underlying change in investors’ expectations for returns from long-term assets, rather than short-term variability. The company also explained that its cash flow assumptions were developed using inflation forecasts and commodity price projections considered consistent with the macroeconomic outlook informing its assessment of expected rates of return. Analysis of an alternative set of internally consistent assumptions, including discount rates derived from market interest rates at the end of 2022, indicated to the company that no material incremental impairment losses would be recognised. On that basis we did not consider it proportionate to pursue the matter further. The company agreed to enhance its disclosures relating to: impairments; its approach to determining the discount rate; key judgements exercised in doing so; and interdependencies between key assumptions. |
| Entity | SigmaRoc plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | PKF Littlejohn LLP |
| Case Summary / Press Notice |
Business combinations During the year ended 31 December 2022, following completion of a purchase price allocation exercise, the company recognised significant adjustments to the fair value of acquired assets of Nordkalk and B-Mix, which were acquired during the year ended 31 December 2021. We asked about the initial accounting for these business combinations and why the fair value adjustments to provisional amounts made during the measurement period had not been made retrospectively as required by IFRS 3. The company agreed to include an explanatory note explaining that the provisional amounts should have been retrospectively adjusted and agreed to ensure that they complied with the standard when undertaking future acquisitions. Alternative performance measures (‘APMs’) We questioned whether there was undue prominence of APMs in the company’s strategic report. The company provided an explanation for their use of adjusted measures and agreed to ensure that there was not undue prominence of the adjusted measures in future reports. Impairment of goodwill The company identified long-term growth rates, discount rates and cash flow projections as key assumptions used to perform the goodwill impairment review. We questioned why the company disclosed only the long-term growth rate and the discount rate but did not quantify the assumptions underlying the cash flow projections, and why they did not provide sensitivity analysis for each of the key assumptions or comparative information. The company agreed to enhance its disclosure of the key assumptions and related sensitivities in future annual reports and accounts. Leases We asked the company to explain the basis on which it accounted for leases, as it was unclear from the accounting policy and description of lease balances in the accounts. We received a satisfactory response, in which the company agreed to clarify the disclosure in the next annual report and accounts. |
| Entity | Staffline Group PLC |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | Grant Thornton UK LLP |
| Case Summary / Press Notice |
Revenue from contracts with customers We asked the company for details of revenue and related contract balances subject to the variable consideration constraint, and the amounts of revenue not recognised in 2022 owing to the application of this constraint, including details about the estimation of variable consideration and the potential effect of reasonably possible changes in key assumptions. We were satisfied with the information and explanations received. The company agreed to enhance its future accounting policy disclosure by including a more specific description of the costs-to-date method that was applied in recognising revenue. We also sought further information about the prior year adjustment that had been recognised to correct overstated revenue in periods prior to 1 January 2021. The company provided a satisfactory response, including an explanation of improvements in its process for recognising revenue from complex contracts. |
| Entity | Stelrad Group plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Alternative Performance Measures (‘APMs’) We made a number of observations about the calculation and presentation of certain APMs presented in the company’s strategic report and asked how the directors intended to address these matters in the 2023 annual report and accounts. The company satisfactorily explained the improvements it will make to its disclosure of APMs in future annual reports and accounts. These improvements include giving equal prominence to IFRS measures in the strategic report, reconciling all APMs and including an explanation about the limitations of the company’s APMs. Accounting for the effects of hyperinflationary economies The company provided a satisfactory response to our request to provide further information about the basis of calculation for certain amounts relating to the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. |
| Entity | Taylor Wimpey UK Limited |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | TBC Bank Group PLC |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | Team17 Group plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Alternative Performance Measures (‘APMs’) We asked for further details regarding the adjustments made to arrive at the measure of Adjusted EBITDA. The company provided this information, and agreed to clarify the disclosures in future annual reports. Development costs We asked the company to explain the amortisation method used for capitalised development costs. The company satisfactorily explained this and agreed to enhance its accounting policy description and related disclosures in future accounts. Goodwill impairment review We requested more granular information regarding the goodwill impairment reviews carried out for each of the company’s four cash generating units, including sensitivities to key assumptions. The company provided this and agreed to provide more granular disclosures in the future. |
| Entity | The British United Provident Association Limited |
| Balance Sheet Date | 30 June 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | The City Pub Group plc |
| Balance Sheet Date | 25 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | Haysmacintyre LLP |
| Case Summary / Press Notice | N/A |
| Entity | The Gym Group plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Recoverability of investments in subsidiaries and amounts owed by group undertakings We asked the company to provide details of the impairment review that was performed on the parent company accounts for investments in subsidiaries, and any sensitivities calculated to changes in the key inputs and assumptions. We also requested an explanation of how the expected credit loss model was applied to amounts owed by group undertakings. The company provided satisfactory responses and agreed to enhance the discussion and related disclosures of these matters in its annual report and accounts for 2023. |
| Entity | The Merchants Trust PLC |
| Balance Sheet Date | 31 January 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice | N/A |
| Entity | The Monks Investment Trust PLC |
| Balance Sheet Date | 30 April 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice | N/A |
| Entity | The Schiehallion Fund Limited |
| Balance Sheet Date | 31 January 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | KPMG Channel Islands Limited |
| Case Summary / Press Notice | N/A |