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 | Impax Asset Management Group plc |
|---|---|
| Balance Sheet Date | 30 September 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice |
Revenue recognition We asked the company to clarify whether management advisory fees included an element of variable consideration, as defined in IFRS 15 ‘Revenue from Contract with Customers’. The company confirmed that there is an element of variable consideration, and satisfactorily explained how management estimates it, how the revenue constraint is applied, and why they did not believe this to involve significant judgement. The company agreed to enhance the relevant disclosures in future. |
| Entity | INEOS Enterprises Holdings Limited |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | June 2024 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice | N/A |
| Entity | iomart Group plc |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice |
The company’s disclosures explained that the total consideration payable upon its acquisition of two subsidiaries included contingent consideration payable to the vendors. Corresponding RNS announcements explained that the previous shareholders had joined the company after the acquisition date. We requested further information to help us understand how the company had applied the requirements of IFRS 3 ‘Business Combinations’ in relation to whether contingent consideration should be classified as acquisition consideration or as post-acquisition remuneration. We closed our enquiries after the company explained that the vendors were not contractually required to remain in employment after the acquisition date to be entitled to the payments. |
| Entity | James Latham Plc (3) |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | RSM UK Audit LLP |
| Case Summary / Press Notice |
Parent company cash flow statement and balance sheet We asked the company for further information about certain parent company working capital movements in its cash flow statement and its presentation of the bank overdraft as part of cash and cash equivalents in the balance sheet. The company provided the requested information and concluded that:
The company agreed to restate the comparative figures presented in the parent company cash flow statement and balance sheet in its next report and accounts. As the changes affected primary statements, we asked the company to disclose the fact that the matters had come to its attention as result of our enquiry. Foreign currency derivatives We asked about the effect of foreign currency derivatives on the measurement of the company’s inventories and revenue. The company provided a satisfactory response. |
| Entity | John Wood Group PLC (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice |
Exchange movements on disposal of foreign operations We asked the Company to explain why the net exchange movements on disposal of foreign currency operations of $54.5m, which was included in the statement of changes in equity, was not included within the statement of comprehensive income. The Company acknowledged the error and agreed to restate the statement of comprehensive income, by including this amount, in its next set of accounts. Significant estimates We enquired about the Company’s estimation uncertainty disclosures relating to liquidated damages and recognition of revenue from variation orders. The Company provided a satisfactory response and agreed to enhance their disclosures in the future. |
| Entity | JPMorgan Global Growth & Income plc |
| Balance Sheet Date | 30 June 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice | N/A |
| Entity | JPMorgan Investment Trust plc |
| Balance Sheet Date | 30 September 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | J Sainsbury plc |
| Balance Sheet Date | 4 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Consolidated cash flow statement We asked the company to explain the basis on which cash outflows associated with the settlement of bond liabilities related to an asset purchase were classified as investing, rather than financing, cashflows in its interim report for the 28 week period ended 16 September 2023. The company satisfactorily explained that the payment was made as a condition of the purchase agreement, in advance of the ultimate settlement of the bond liabilities, and agreed to enhance the related disclosures in its next annual report and financial statements. |
| Entity | Kainos Group Plc |
| Balance Sheet Date | 30 September 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice | N/A |
| Entity | Keller Group plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Impairment of financial assets An apparently material movement in the expected credit loss (‘ECL’) provision was disclosed in the notes to the accounts but not presented separately on the face of the consolidated income statement, as required by IAS 1 ‘Presentation of Financial Statements’. We asked the company to explain why it had not applied this IAS 1 requirement. After further enquiries, it emerged that the ECL movement disclosed in the notes to the accounts was incorrect and that the actual ECL movement was not material. The company agreed to restate the related comparative amounts in the notes to its 2023 accounts and explained that it would present the ECL movement for 2023 on the face of the income statement as the amount was material. We also asked the company to explain the movement in ECL rates related to the ECL provision for trade and other receivables. The company responded satisfactorily and agreed to include an explanation of the movement in these rates in next year’s annual report and accounts and in any future accounts that have material movements. |
| Entity | Keystone Law Group plc (3) |
| Balance Sheet Date | 31 January 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | RSM UK Audit LLP |
| Case Summary / Press Notice |
Accrued income We requested further information about the measurement of accrued income and clarification of whether a provision against this balance was recorded. The company satisfactorily provided details of the method used to value accrued income and confirmed the amount of provision held was not material. As the method to calculate accrued income had historically proved to be accurate, we encouraged the company to reconsider whether there was a significant risk of material adjustment to the carrying amount in the next financial year that was required to be disclosed as a key source of estimation uncertainty. Alternatively, if the estimate of accrued income carried lower risk, having a smaller impact or crystallising over a longer timeframe, any disclosures provided should be clearly distinguished from those with a significant short-term effect. Expected credit losses We asked the company to explain its rationale for not presenting apparently material impairment losses on trade receivables on the face of the consolidated income statement, as required by IAS 1 ‘Presentation of Financial Statements’. Upon review, the company agreed to restate the 2023 comparative consolidated income statement in its 2024 accounts, to separately present the impairment charge, and agreed to disclose the fact that the matter had come to its attention as a result of our enquiry. Provisions We sought further information about the company’s provisions and the accounting for claims covered by insurance, which the company provided. In view of the amount of claims-related provisions, we encouraged the company to reconsider whether an accounting policy was necessary or, alternatively, if there were no material claims in the current or preceding year, to make a statement to that effect. |
| Entity | Manchester Airport Holdings Limited |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Revenue recognition We asked the company to clarify the basis on which it concluded it was acting as principal in respect of utilities recharges to tenants, and whether this determination involved significant judgement. The company satisfactorily explained the factors that management took into account in reaching their conclusion, and why they did not believe this analysis involved significant judgement. |
| Entity | Marlowe plc |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | RSM UK Audit LLP |
| Case Summary / Press Notice | N/A |
| Entity | Martin-Brower UK Ltd |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | June 2024 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice |
This company was selected as part of our thematic review of the UK's largest private companies and, as such, only disclosures included in the scope of the thematic were reviewed. Impairment testing We asked the company to explain the nature of capital investments included in future cash flows in the value in use calculation prepared for the impairment testing of goodwill and investments. The company explained its impairment methodology and identified that, in some instances, this had included capital investment which was not allowed under the requirements of FRS 102. The company confirmed that there remained no impairment after reperforming the impairment testing excluding this capital investment and associated benefits and agreed to update its impairment methodology and disclosures in future annual reports and accounts. |
| Entity | M&C Saatchi Plc (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice |
Cash flows on settlement of put options We asked the company to explain why cash paid on the settlement of put options, included as a staff cost in the income statement, was classified within financing activities, rather than operating activities, in the cash flow statement. We noted that these cash flows did not appear to fall within the IAS 7 ‘Statement of Cash Flows’ definition of financing activities. The company acknowledged that classification of these cash flows within operating activities would be more appropriate. Consequently, the company agreed to classify all cash payments relating to such put options within operating activities in the 2023 annual report and accounts and to restate the 2022 comparative amounts. As the restatement affected a primary statement, we asked the company to disclose the fact that the matter had come to its attention as a result of our enquiry. Headline results We asked for an explanation of why the company’s measure of headline results excludes from staff costs amounts relating to dividends paid to put holders and put option accounting. The company provided an explanation of its rationale for excluding these items and agreed to explain this in its future reporting. |