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 Supervision Committee’s Operating Procedures, 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 | The Gym Group plc |
|---|---|
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | December 2022 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice | N/A |
| Entity | The Mercantile Investment Group Plc |
| Balance Sheet Date | 31 January 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | December 2022 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice | N/A |
| Entity | The National Farmers Union Mutual Insurance Society Limited |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | December 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Business interruption claims due to the Covid-19 pandemic We asked for further information about the insurer’s potential exposure to claims for business interruption (BI) due to the Covid-19 pandemic and its approach to accounting for, and the disclosure of, a related potential group action threatened against the company. The company provided a satisfactory response to our enquiry. It clarified that, as an insurer, and as potential liabilities relating to its insurance contracts or claims which may arise from such contracts are accounted for under FRS 103 ‘Insurance Contracts’, the requirements of section 21 ‘Provisions and Contingencies’ of FRS 102 did not apply in relation to BI claims or the threatened group action. The company explained that it had not provided FRS 103 disclosures about the BI claims, including the threatened group action, because the potential exposure regarding the nature and extent of the risk was not determined to be material to its 2021 annual accounts. |
| Entity | The Weir Group PLC |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | December 2022 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | TI Fluid Systems Plc |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | December 2022 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | Tritax Big Box REIT Plc |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | December 2022 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice | N/A |
| Entity | Trustpilot Group plc |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | December 2022 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | Vodafone Group Plc |
| Balance Sheet Date | 31 March 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | December 2022 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice | N/A |
| Entity | YouGov plc (3) |
| Balance Sheet Date | 31 July 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Capitalisation of panel acquisition costs The company recognises intangible assets relating to its consumer panels, which comprise some of the costs of recruiting new members to the panel. We requested further information from the company to help us understand the basis for the conclusion that these costs meet the criteria for capitalisation, which it disclosed as a critical judgement. We enquired specifically about the unit of account applied to panel assets and how this links to the way in which the panel assets are utilised and managed. We also asked the company to explain how the requirements of IAS 38, ‘Intangible Assets’, had been considered when developing its accounting policy. The company explained that each monthly cohort of panellists in an individual country is recognised as a separate asset. The company explained the basis for capitalising panel acquisition costs and the rationale for using the unit of account chosen. The company agreed to enhance the critical judgement disclosure in its 2022 annual report and accounts. Statement of cash flows We asked the company to confirm whether the cash flow for ‘settlement of deferred consideration’ related to consideration which was contingent upon the future employment of the former owners of acquired businesses. The company confirmed it was and acknowledged that the resulting cash flow should have been classified as an operating rather than investing cash flow. We requested an explanation of the calculation of cash flow amounts for both ‘purchase of intangible assets’ and ‘acquisition of subsidiaries’ as it appeared some cash flows were included within both. The company confirmed that it had double-counted some amounts by including them in both cash flows and also identified several other offsetting errors made in the presentation of the cash flow statement. The company agreed to restate the comparatives in its next annual report and accounts for each of the above changes. As all of these affected a primary statement, we asked the company to disclose the fact that the matters had come to its attention as a result of our enquiry. We also asked the company to explain the rationale for classifying some intercompany cash flows in the parent company cash flow statement. The company acknowledged that it would have been more appropriate to reclassify some of the amounts but noted that it intended to adopt FRS 101, ‘Reduced Disclosure Framework’, and take the exemption from presenting a parent company statement of cash flows in its future reporting. We closed our enquiries on this basis. Deferred tax assets for share options We requested more information on how the tax impact of share options, both current and deferred, has been accounted for and whether the reductions in deferred tax assets related to the exercise of share options. IAS 12, ‘Income Taxes’, requires tax deductions in excess of the cumulative remuneration expense for share-based payments to be recognised directly in equity. The company confirmed that it had correctly accounted for the split in deferred tax between the income statement and equity. However, on the exercise of the share options all current tax, and the reversal of previously accumulated deferred tax, had been included incorrectly within the income statement, despite the total tax deductions being in excess of the cumulative remuneration expense for the associated share-based payments. Following our enquiry, the company also identified additional adjustments to the presentation of deferred tax assets and liabilities. The company agreed to restate the comparatives in its next annual report and accounts for each of the above changes. As all of these affected a primary statement, we asked the company to disclose the fact that the matters had come to its attention as a result of our enquiry. Other deferred tax assets We also asked the company to explain the extent to which the change in the future UK corporation tax rate had been recognised in the carrying amount of deferred tax assets and the reasons for a reclassification of deferred tax assets. The company explained how it had considered the impact of the rate change. It also confirmed that several of the items included within the reclassification should not have been described as such. The company agreed to correct this in future annual reports and accounts, noting that it did not consider the amounts to be material. |
| Entity | abrdn plc |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | September 2022 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice | N/A |
| Entity | Acre 1175 Limited |
| Balance Sheet Date | 31 July 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | September 2022 |
| Auditor (5) | HW Fisher LLP |
| Case Summary / Press Notice |
We noted that the company was required to include in its strategic report a statement which describes how the directors have had regard to the matters set out in section 172(1)(a) to (f)*, Companies Act 2006, when performing their duty under section 172. The company confirmed that it would provide the relevant disclosure in future annual reports and accounts. * These matters cover: long-term consequences of decisions; interests of employees; business relationships; the company’s impact on the community and the environment; maintaining a high reputation for business conduct; and acting fairly between members. |
| Entity | Baillie Gifford Japan Trust PLC |
| Balance Sheet Date | 31 August 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | September 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | Buxton Holdings Limited |
| Balance Sheet Date | 31 July 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | September 2022 |
| Auditor (5) | HW Fisher LLP |
| Case Summary / Press Notice |
We noted that the company was required to include in its strategic report a statement which describes how the directors have had regard to the matters set out in section 172(1)(a) to (f)*, Companies Act 2006, when performing their duty under section 172. The company confirmed that it would provide the relevant disclosure in future annual reports and accounts. * These matters cover: long-term consequences of decisions; interests of employees; business relationships; the company’s impact on the community and the environment; maintaining a high reputation for business conduct; and acting fairly between members. |
| Entity | CareTech Holdings PLC |
| Balance Sheet Date | 30 September 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
We sought and received further information about put options granted to owners of the non-controlling interest in the Smartbox business, acquired during the period. The company agreed to enhance its disclosures regarding these options, including relevant judgements and estimates, in its next annual report and accounts. We also asked the company to provide explanations and reconciliations for apparent inconsistencies in disclosures relating to:
The company acknowledged errors affecting these disclosures and agreed to correct the relevant amounts and their labelling in its next annual report and accounts. The company also agreed to enhance its disclosure of right of use asset disposals. |
| Entity | Carnival plc (3) |
| Balance Sheet Date | 30 November 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Our enquiries related to the Strategic Report and IFRS financial statements of Carnival plc for the year ended 30 November 2020. The combined US GAAP financial statements of Carnival Corporation and plc for that year, mentioned below, were not within the scope of our inquiries. The disclosure of the possible effects of climate change on the Company’s business
The company explained that it had subsequently enhanced its disclosures in the above respects in its Strategic Report and IFRS financial statements for the year ended 30 November 2021. The company undertook to include in its future Strategic Reports a summary of the impact of the business on the environment and disclosure of appropriately balanced information regarding the usage of LNG, reflecting the different views as to the impact of LNG on the environment relative to other fossil fuels. The company also agreed to continue to monitor environmental developments and to update its disclosure of the potential effect of climate change on significant judgements and estimates, including in relation to impairment and useful lives of ships, as the company’s understanding of the actual and potential impacts develops and changes in the related assumptions are made. We also asked the company to consider clearer signposting in the various documents that form its annual report to the individual disclosures required under subsections 414CB(2)(a) to (e) and subsections 172(1)(a) to (f) of the Act (as required under section 414CZA). The company included clearer signposting to these disclosures in its 2021 Strategic Report. Alternative performance measures (‘APMs’) We asked the company to consider how it might improve the presentation of financial information in the Strategic Report (which is based on the US GAAP results of Carnival Corporation and plc rather than the IFRS results of Carnival plc) to align with the European Securities and Markets Authority (‘ESMA’) ‘Guidelines on Alternative Performance Measures’ as regards prominence compared with, and reconciliations to, the IFRS financial statement figures. We also asked the company to reconsider the granularity of the related reconciliation provided in the segment reporting note in line with paragraph 28 of IFRS 8, ‘Operating Segments’. The company committed to present key IFRS measures for Carnival plc in its 2022 and future Strategic Reports. It also provided a more granular reconciliation between the combined group US GAAP and plc IFRS results in the segment reporting note for the year ended 30 November 2021. We encouraged the company to include a cross-reference to this reconciliation from the Strategic Report. Cash flow statements We asked for more information on the gross cash payments to, and receipts from, other group entities reported as net amounts in the group cash flow statement. The company satisfactorily explained the presentation of cash flows on a net basis in relation to amounts owed to other group entities. We also questioned the classification of cash flows in relation to loans to other group entities as financing activities in the parent company cash flow statement, rather than investing activities under paragraphs 6 and 16(e) of IAS 7 ‘Statement of Cash Flows’. The company identified that certain cash flows in relation to loans to other group entities had been incorrectly presented as financing activities in the years ended 30 November 2020 and 2021 and stated that it would restate the comparative parent company statement of cash flows for the year ended 30 November 2021 included in the 2022 financial statements to present these cash flows within investing activities. As the matter 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. Accounting for foreign exchange We requested further information on the foreign exchange accounting policy applied by the parent company in its individual financial statements. The company explained its foreign exchange accounting policy in relation to the parent company’s individual financial statements and undertook to expand its policy wording in its 2022 financial statements. As a result of our enquiries the company revised its net investment hedging accounting treatment and the translation of investments in subsidiaries, and recognised immaterial adjustments in its 2021 parent company financial statements to amend its previous accounting treatment in these respects. Accounting for dry-docking costs We asked the company to clarify its accounting policy in relation to dry-docking costs in the light of the requirements of paragraph 14 of IAS 16, ‘Property, Plant and Equipment’. The company satisfactorily responded to our enquiry and revised the accounting policy wording for dry-docking costs in its IFRS financial statements for the year ended 30 November 2021. |