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 | Dixons Carphone plc |
|---|---|
| Balance Sheet Date | 27 April 2019 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | Drax Group plc |
| Balance Sheet Date | 31 December 2019 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Significant estimates disclosure The company’s narrative reporting identified uncertainties associated with future developments in subsidy schemes and related initiatives to reduce production costs in the biomass generation business. We asked for information about how these uncertainties had been addressed in the company’s asset impairment assessments, and about which specific assumptions met the ‘estimation uncertainty’ criteria in IAS 1, ‘Presentation of Financial Statements’. The company gave a satisfactory explanation and committed to make clearer disclosures about these matters in its 2020 accounts. We also asked for an explanation of how these uncertainties had been considered in assessing the recoverability of deferred tax assets. The company provided a satisfactory explanation. Disclosure related to impairment tests We asked the company for further information about impairment sensitivity disclosures provided in respect of recently acquired generation businesses. The company provided a satisfactory response and agreed to clearly distinguish those disclosures which relate to ‘reasonably possible’ changes in key assumptions, which are required under IAS 36, ‘Impairment of assets’, from additional sensitivity disclosures provided voluntarily. Segmental reporting We requested information about the company’s segmental disclosures and overall reporting on changes in the relative importance of different fuel types to the business. The company provided a satisfactory explanation and a commitment to enhance narrative reporting on the changing mix of generation by fuel type. |
| Entity | Electrocomponents plc |
| Balance Sheet Date | 31 March 2020 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | FirstGroup plc |
| Balance Sheet Date | 31 March 2020 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | Gama Aviation Plc |
| Balance Sheet Date | 31 December 2018 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | GoCo Group plc |
| Balance Sheet Date | 31 December 2019 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
This company was selected as part of our thematic review related to the application of IFRS 15 ‘Revenue from Contracts with Customers’ and, as such, only the disclosures relating to revenue recognition were reviewed. Disclosure about significant estimates We requested additional information about the estimation uncertainty associated with the accrued income balance. The company provided this information, including an explanation of how it estimates accrued income. It acknowledged that additional disclosure under IAS 1 ‘Presentation of Financial Statements’ about the significant estimation uncertainty associated with the balance should have been disclosed within the accounts. Where significant estimation uncertainty exists, the company agreed to disclose additional information about:
|
| Entity | Grainger plc |
| Balance Sheet Date | 30 September 2019 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | Hammerson plc |
| Balance Sheet Date | 31 December 2019 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | HICL Infrastructure PLC |
| Balance Sheet Date | 31 March 2020 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | Homeserve plc |
| Balance Sheet Date | 31 March 2020 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | HSBC Holdings plc |
| Balance Sheet Date | 31 December 2019 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Impairment We asked the company to provide us with further information regarding the allocation of impairment losses to the ‘Middle East and North Africa – CMB’ cash-generating unit (‘CGU’). In its December 2019 Annual Report and Accounts, the company had provided an analysis of the carrying amount and value in use of those CGUs where goodwill had been impaired during the year. The carrying amount of the ‘Middle East and North Africa – CMB’ CGU was $2.6 billion compared to a value in use of $1.5 billion. However, we noted that, of the $1.1 billion difference, only $0.1 billion had been recognised as an impairment against goodwill. The company satisfactorily responded to our query, explaining that the non-financial assets of the group were insignificant, meaning that the residual deficit of $1 billion could not be allocated once goodwill had been impaired. In addition, the company concluded that the unallocated deficit did not meet the definition of a liability under another accounting standard. |
| Entity | Ibstock plc |
| Balance Sheet Date | 31 December 2019 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | IMI plc |
| Balance Sheet Date | 31 December 2019 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Revenue recognition The company’s revenue accounting policy did not explain the accounting treatment applied to customer discounts and promotions in one of its three divisions. In response to our enquiry, the company explained its policies and said that it considered the level of uncertainty involved in estimating these items to be minimal. It agreed to enhance its disclosures of these items in its next report and accounts. Derivatives We were unable to reconcile movements in balance sheet items relating to derivatives to the relevant gains and losses recognised in the statement of comprehensive income. The company provided further details on the nature of the derivatives used in its activities and explained how the movements reconciled. In response to our queries, it committed to disaggregate certain line items relating to gains and losses on derivatives in future statements of comprehensive income. We explained that there were additional disclosures relating to other comprehensive income and hedge accounting that we would expect the company to provide in the following year’s report and accounts. |
| Entity | Imperial Brands PLC |
| Balance Sheet Date | 30 September 2019 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | IntegraFin Holdings plc |
| Balance Sheet Date | 30 September 2019 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |