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 | SDCL Energy Efficiency Income Trust Plc |
|---|---|
| Balance Sheet Date | 31 March 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | Sequoia Economic Infrastructure Income Fund Limited |
| Balance Sheet Date | 30 September 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | Grant Thornton Limited, Guernsey |
| Case Summary / Press Notice | N/A |
| Entity | Severfield plc |
| Balance Sheet Date | 26 March 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice |
Accounting for contract variations We asked the company to explain whether the contract variations mentioned in its accounting policies represented contract modifications and, if so, the basis on which it concluded that it was appropriate to account for such modifications before they are approved by customers. We closed the matter after the company explained that the variations were contract modifications and clarified that it recognises revenue relating to modifications when they have been approved, as required by IFRS 15 ‘Revenue from Contracts with Customers’. It agreed to improve the accounting policy disclosed in its FY2023 accounts. Contract assets We raised a query in the light of a comment in the accounts which suggested that steel purchased to meet FY2023 production requirements may have been included in contract assets, rather than in inventory. We closed our query after the company clarified that contract assets did not include inventory and agreed to reconsider the comments included in its next annual accounts. Capitalised contract costs We asked the company to explain the accounting policy for capitalised contract costs mentioned in its disclosures, and the basis on which the policy complied with IFRS 15. We closed our query after it explained that the costs were not material. Cash balances and overdrafts We questioned why overdrafts in the parent company accounts were greater than those in the consolidated accounts. The company explained that, in its consolidated accounts, it had offset cash and cash equivalents of £1.7m against overdrafts. It acknowledged that it had not met the criteria required by IAS 32 ‘Financial Instruments: Presentation’ to allow such a presentation. We closed the matter after the company explained that it will correct the error prospectively in its next annual accounts. It explained that it did not intend to restate the comparative information in those accounts as it did not believe that the error was material. In closing our query, we observed that the error exceeded audit materiality of £1.4m and we explained that we expect the company to consider whether the matter involved significant judgement, the disclosure of which is required by paragraph 122 of IAS 1 ‘Presentation of Financial Statements’. |
| Entity | Spire Healthcare Group plc |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Impairment testing of goodwill and property We asked the company for further information about whether a reasonably possible change in the key assumptions would result in the recoverable amount of goodwill being less than the balance sheet carrying amount. The company provided a satisfactory response and agreed to clarify its disclosures in future. We enquired about the company’s disclosures of estimation uncertainty relating to the estimates used to test for impairment under IAS 1 'Presentation of Financial Statements'. The company agreed to clearly distinguish those disclosures relating to estimation uncertainty required under IAS 1, where there is significant risk of a material adjustment in the next financial year, from additional disclosures provided voluntarily. We also asked about the basis on which a significant improvement in hospital performance was assumed in the value-in-use calculations. The company provided a satisfactory explanation and agreed to clarify this in its future disclosures. Taxation We asked for an explanation of the tax adjustment included in the tax reconciliation in respect of a sale and leaseback transaction. The company explained that this principally resulted from the release of a deferred tax liability, originally recognised on a business combination, and the recognition of a deferred tax asset relating to the lease. In its future reporting the company agreed to disclose the fact that the majority of its freehold properties had been acquired by way of business combinations which would explain why they had attracted deferred tax. |
| Entity | SSE plc |
| Balance Sheet Date | 31 March 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice | N/A |
| Entity | Supreme PLC |
| Balance Sheet Date | 31 March 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice | N/A |
| Entity | Syncona Limited |
| Balance Sheet Date | 31 March 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice | N/A |
| Entity | Synthomer plc |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | TJX UK |
| Balance Sheet Date | 29 January 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | TP ICAP Group plc |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice | N/A |
| Entity | Travis Perkins Plc |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice | N/A |
| Entity | TUI AG |
| Balance Sheet Date | 30 September 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | Deloitte GmbH Wirtschaftprüfungsgesellschaft |
| Case Summary / Press Notice | N/A |
| Entity | Tyman Plc (3) |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Offsetting of deferred tax balances We asked for further information about the company’s application of paragraph 74 of IAS 12 ‘Income Taxes’ to its deferred tax asset and liability balances, which were presented on a gross basis in the accounts. The company concluded that certain asset and liability balances arose in the same tax jurisdiction and met the criteria for offsetting under IAS 12. The company agreed to restate the 31 December 2021 comparatives in its 2022 accounts, offsetting these balances. Offsetting of bank overdraft The company presented its cash at bank and bank overdraft balances on a net basis in the accounts on the basis of its cash pooling arrangements giving a legal right of offset. We asked for further information about the application of paragraph 42(b) of IAS 32 ‘Financial Instruments: Presentation’, in conjunction with the IFRS Interpretation Committee’s March 2016 decision regarding cash-pooling arrangements. Following a review of their cash pooling arrangements, the company concluded that, although there is a legal right of offset, as they did not settle the entire period-end balance subsequent to the year-end and had further transactions before the next net settlement date, the second criterion of IAS 32 paragraph 42 was not met. The company agreed to restate the 31 December 2021 comparatives in its 2022 accounts, presenting the balances on a gross basis. As both of the above restatements related to a primary statement, we asked the company to disclose that the matters had come to its attention as a result of our enquiry. Research and development expenditure We asked for further information about the company’s development costs and the associated accounting policy. The company provided further context for its development activities and explained its policy in more detail. It agreed to make some clarifications to its policy in its 2022 accounts, and to disclose the total R&D costs expensed to the income statement in accordance with IAS 38 ‘Intangible Assets’. |
| Entity | UK Power Networks Holdings Limited |
| Balance Sheet Date | 31 March 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice | N/A |
| Entity | Unilever PLC |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice | N/A |