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 | Carr's Group plc |
|---|---|
| Balance Sheet Date | 3 September 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | Grant Thornton UK LLP |
| Case Summary / Press Notice | N/A |
| Entity | CMS Cameron McKenna Nabarro Olswang LLP |
| Balance Sheet Date | 30 April 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Provisions We asked the LLP to explain why costs associated with settling claims for alleged negligence that are considered likely to succeed are recognised net of the related insurance receivable. The LLP explained that, although this presentation did not comply with FRS 102, it considers insurance receivables to be immaterial currently and agreed to clarify its accounting policies and disclosures in this area. The LLP undertook to present insurance reimbursement assets separately should they become material. Retirement benefit asset We sought an explanation for the basis on which the recognised retirement benefit surplus was recoverable. The LLP provided a satisfactory explanation and agreed to disclose why the pension surplus is recoverable in its next annual accounts. Annuities We asked the LLP to clarify the accounting policy applied to annuities to current and former members. The LLP explained that annuities to former members should have been accounted for as financial liabilities rather than provisions but that they consider such balances to be immaterial. The LLP stated that there were no annuities payable to current members and agreed to clarify its accounting policies in this respect. |
| Entity | Crest Nicholson Holdings plc |
| Balance Sheet Date | 31 October 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Inventories The company disclosed that land options were written down on a straight-line basis over the life of the option. We sought an explanation for this treatment, as it would indicate that the expected future economic benefits resulting from the land options gradually diminish regardless of the expected outcome. The company explained that accounting for the land options at cost less impairment would not result in a material difference. On this basis, we did not consider it proportionate to pursue the matter further. We also questioned whether the company considered further disaggregation of the inventory balance to separately disclose the carrying value of land. The company agreed to provide such disaggregation. Due to the implementation of a new ERP system, the company expects this to be disclosed in its 2024 report and accounts with comparatives for 2023. |
| Entity | CRH plc |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | September 2023 |
| Auditor (5) | Deloitte Ireland LLP |
| Case Summary / Press Notice |
Impairment testing of goodwill We asked the company to explain certain aspects of its impairment testing methodology relating to the inclusion of forecast capital expenditure associated with achieving 2025 carbon reduction targets in its value in use calculations, and the basis for forecasting cash flows for a period exceeding five years. We also asked the company for an explanation of how climate change had been incorporated in the impairment testing methodology and assumptions. The company explained that forecast capital expenditure included in impairment testing relating to achieving 2025 carbon reduction targets did not represent enhancement expenditure, as it maintained current performance rather than increasing capacity, and that it was, therefore, appropriate to include this expenditure and the resulting cash flows in its value in use calculations. The company enhanced the disclosures in its 2022 annual report and accounts to make this clear. The company also explained the circumstances in which it may use a period of longer than five years for cash flow forecasting purposes in impairment testing, and that it had not made any adjustments to cash flows beyond the five year strategic plan horizon under this approach in 2021. It updated the disclosures associated with this policy. The company satisfactorily explained how climate-related risks, including the risk of increased future carbon costs, had been incorporated into the value in use assessments used in its impairment testing of goodwill. The company enhanced these disclosures in its 2022 annual report and accounts by disclosing the assumptions applied in respect of future carbon costs, including the anticipated ability to recover increased carbon costs through pricing, as well as the impact of applying carbon cost assumptions from a Paris-aligned global warming scenario on these value in use assessments. The company also included detailed considerations of climate risk in the context of its accounting for property, plant and equipment. We closed our enquiries on the basis of these helpful additional disclosures. |
| Entity | Croda International Plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice |
UK defined benefit pension scheme asset We asked the company to clarify whether the UK defined benefit pension scheme was open to future accrual and how the company expects to recover the scheme surplus through reduced future contributions. The company confirmed that the UK scheme remains open to new members and future service accrual, clarifying that the surplus can be recovered through a reduction in future service contributions. The company agreed to update its disclosures to make it clearer that the UK scheme remains open to future accrual and to new members. |
| Entity | Deliveroo plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice | N/A |
| Entity | Deloitte LLP |
| Balance Sheet Date | 31 May 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice |
Former and current members’ annuities We requested further information about the possible impact on the LLP’s future accounts of applying IFRS 17 to the accounting for former and current members’ annuities. The LLP explained that it is analysing the impact of adopting the standard and will disclose the possible impact in its May 2023 accounts. We queried whether the provision for member annuities is sensitive to changes in the mortality assumption. The LLP confirmed that it is not and that it will update the wording of the accounting policy for member annuities in its May 2023 accounts. |
| Entity | Digital 9 Infrastructure plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | discoverIE Group plc (3) |
| Balance Sheet Date | 31 March 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Netting positive bank balances and overdrafts The company presented its positive bank balances and overdrafts on a net basis. We asked for further information about the basis on which it met the two criteria in IAS 32 ‘Financial Instruments: Presentation’ required for offsetting financial assets and liabilities. The company acknowledged that positive bank balances and overdrafts relating to a particular group cash pooling arrangement should have been presented on a gross basis. Although there was a legal right of offset, the company could not demonstrate the intention to settle the period-end balances on a net basis, as required by IAS 32. The company agreed to restate the comparative balance sheet in its next accounts by presenting the positive bank balances and overdrafts separately and committed to provide the relevant disclosures required by IFRS 7, ‘Financial Instruments: Disclosures’. As the restatement related to a primary statement, we asked the company to disclose that the matter had come to its attention as a result of our enquiry. |
| Entity | Essentra plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | Frasers Group Plc |
| Balance Sheet Date | 24 April 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | RSM UK Audit LLP |
| Case Summary / Press Notice | Consent withheld |
| Entity | Gamma Communications plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice | N/A |
| Entity | Gateley (Holdings) Plc (3) |
| Balance Sheet Date | 30 April 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | MHA MacIntyre Hudson |
| Case Summary / Press Notice |
Acquisition payments linked to post-acquisition employment We requested more information about the nature of amounts paid and payable in a business combination to vendors that remained in employment post-acquisition. The company explained that the vendors’ rights to these payments are contingent upon the vendors remaining in employment for a specified period and consequently agreed to account for these amounts as a post-acquisition remuneration expense under IFRS 3, ‘Business Combinations’, rather than as acquisition consideration. The company also agreed to revisit the accounting for previous acquisitions that included similar terms, and to restate the financial information for the year ended 30 April 2022 accordingly in its next annual report. The company agreed to disclose the fact that the matter had come to its attention as a result of our enquiry. Distributable profits We questioned whether the company’s assessment of the level of its distributable profits had taken into account the non-distributable cumulative credit to equity in relation to share-based payment charges included in the carrying amount of its investment in subsidiaries. The company confirmed that it had not, and that consequently the dividend paid in October 2022 was in excess of the company’s distributable profits in its audited financial statements for the year ended 30 April 2022. The company confirmed that, although it had sufficient distributable reserves at the date the dividend was paid, it had not filed interim accounts to support the distribution as required under section 836(2)(a) of the Companies Act 2006. The company agreed to take steps to ratify this payment. |
| Entity | Genus Plc |
| Balance Sheet Date | 30 June 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice |
We noted that the company’s annual report did not include a clear statement explaining whether the report included climate‐related financial disclosures consistent with the recommendations and recommended disclosures of the Taskforce for Climate-related Financial Disclosures (TCFD), as required by the Listing Rules. We also identified a number of areas where improvements could be made to the company’s TCFD disclosures. We closed our enquiries after the company confirmed that it will provide a clearer statement that fulfils the requirements of the Listing Rules in its future reports. It agreed to provide explanations about any TCFD recommendations and recommended disclosures not included in its future reports, together with relevant explanations, as required by the Listing Rules. It also agreed to make a number of improvements to the TCFD disclosures, consistent with our expectations as set out in our recent thematic review report. |
| Entity | GlobalData Plc (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2023 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice |
Refinancing transactions We requested more information about the nature of two refinancing transactions completed in the year. The company satisfactorily explained the circumstances of these, clarifying that the August 2022 refinancing of the previous term loan and revolving credit facilities (‘RCF’) was judged to be a repayment of the group’s existing debt and the drawdown of new debt facilities under IFRS 9, ‘Financial Instruments’. The company acknowledged that the disclosure in its annual report, which stated that the transaction was accounted for as a substantial modification of the existing debt, was incorrect. The company agreed to include amended wording, and highlight the wording error, in its next annual report and accounts. We also questioned the accounting treatment applied to the costs of the refinancing transactions. The company satisfactorily responded to our enquiries. We sought clarification of the basis for presenting the financing cash flows related to the refinancing of the previous term loan and RCF on a gross basis in the consolidated cash flow statement. The company identified that the transaction had resulted in the receipt of a single net cash inflow and agreed to restate the consolidated cash flow statement and related notes for the year ended 31 December 2022 accordingly in its next annual report and accounts. The company agreed to disclose the fact that the matter had come to its attention as a result of our enquiry. |