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 | Quixant plc |
|---|---|
| Balance Sheet Date | 31 December 2020 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | September 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | Royal Mail plc |
| Balance Sheet Date | 31 March 2019 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | RSM UK Holdings Limited |
| Balance Sheet Date | 31 March 2019 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | Softcat plc |
| Balance Sheet Date | 31 July 2020 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | September 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | Stock Spirits Group PLC |
| Balance Sheet Date | 30 September 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Brands We asked the company to confirm whether there were any individual brand assets that were material to the financial statements. The company provided details of such brands for 2020 and agreed to disclose the carrying amount of any individually material brands in its 2021 annual report and accounts. We also queried whether the factors supporting the assessment of an indefinite useful life for brands applied to all individually material indefinite life brands. The company confirmed that this was the case. We recommended that this was clarified in future annual reports and accounts. Impairment testing of goodwill and indefinite life intangible assets We asked the company to explain how it was satisfied that using post-tax cash flows and a post-tax discount rate, did not give rise to material differences from the requirements of IAS 36 ‘Impairment of Assets’. The company provided a satisfactory response and agreed to disclose the pre-tax discount rate in future annual reports and accounts. Accounting policy for cash and cash equivalents We asked the company to clarify the maturity threshold used for determining which short-term investments qualify as cash equivalents, for the purposes of IAS 7 ‘Statement of Cash Flows’. The company confirmed that it made this assessment by reference to their maturity from acquisition and agreed to clarify the accounting policy in future annual reports and accounts. |
| Entity | Superdry Plc |
| Balance Sheet Date | 25 April 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Deferred tax We asked the company for details of the evidence supporting the recognition of a material deferred tax asset balance relating to jurisdictions that had suffered a loss in either the current or preceding period and to explain why its recognition was not disclosed as a significant estimate under paragraph 125 of IAS 1 ‘Presentation of Financial Statements’. The company provided the information requested and undertook to include more specific disclosures to explain the evidence supporting such deferred tax assets in its 2021 annual accounts. We also requested further details about the recognised and unrecognised deferred tax assets that the company had attributed to IFRS 16 ‘Leases’. The company provided satisfactory explanations and undertook to enhance its disclosure of such deferred tax amounts in future. We requested a breakdown of material deferred tax balances described as relating to ‘temporary differences’. The company provided a satisfactory analysis and undertook to provide disclosures about individually large temporary differences in future. Onerous property-related contracts provision We asked the company for additional information to explain the circumstances that led to a release from its onerous property-related contracts provision in the year. The company provided a satisfactory explanation of the contributing factors. Deferred income We queried the presentation of balances reported as deferred income and the completeness of the disclosure of contract liabilities. The company confirmed the completeness of contract liabilities and explained that the gross amount of the contract liabilities balance was included in deferred income but an amount netted against it had been included in another line item. The company undertook to enhance its disclosure of contract liabilities in future and to present the net amount in the same line. Alternative performance measures (APMs) We queried the company’s use of the term ‘underlying’ in its APMs and how the measures were described, noting some apparent inconsistencies in terminology. We also asked how the label used for the APM met the requirement of the ESMA Guidelines on APMs to allow users to understand the relevance and reliability of the measure. The company gave a satisfactory explanation of its use of APMs. It undertook to change the terminology used to describe its APMs from ‘underlying’ results to ‘adjusted’ results and the description of ‘exceptional and other items’ to 'adjusting items'. Banking covenants We asked for clarification of an apparent inconsistency in commentary about the company’s expected compliance with its banking covenants under a ‘reverse stress test’ between the Chief Financial Officer’s Review and the Independent Auditor’s report. The company explained that there was no intended inconsistency, and that the reverse stress test, by definition, resulted in a covenant breach. The company undertook to ensure that in future the wording used in management’s statements on going concern would be more aligned to that used in the auditor’s report. It will also explain more explicitly the meaning of a reverse stress test. Impairment of receivables We asked the company to explain an apparent inconsistency between the amount presented on the face of the group statement of comprehensive income for ‘impairment losses on trade receivables’ and equivalent amounts presented in the notes to the accounts. The company provided a satisfactory explanation and undertook to present these amounts consistently in future. Goodwill We noted that the company’s conclusion that the cash flows used in the goodwill impairment test for the Retail and Wholesale CGUs were insensitive to any reasonably possible changes to key assumptions appeared to be inconsistent with the downturn in performance experienced by both CGUs. We asked for details of the headroom recorded against each CGU following management’s impairment calculations and the impact on that headroom of the reverse stress test scenarios to demonstrate how the company came to this conclusion. The company provided these details which showed significant headroom remaining in all cases. The company also set out the factors that explained the apparent inconsistency between significant store asset impairments and no goodwill impairment being recognised. |
| Entity | Telecom Plus plc (3) |
| Balance Sheet Date | 31 March 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Significant estimate: revenue recognition We asked the company to provide further information about the estimation uncertainty relating to revenue from non-smart meter customers, including the carrying amounts of associated balances and sensitivities or ranges of reasonably possible outcomes. The company agreed to enhance its disclosure about this significant estimate in future annual reports and accounts. Expected credit losses We asked for an explanation of the basis on which the allowance for credit losses had been calculated and for clarification as to whether the non-current financial assets had been assessed for impairment. Additionally, we asked for further information about the requirement of paragraph 35M of IFRS 7, ‘Financial Instruments; Disclosures’, to disclose, by credit risk rating grades, the gross carrying amount of financial assets. The company confirmed that non-current financial assets are assessed for impairment and agreed to augment its disclosures to include details of the inputs, assumptions and estimation techniques used to calculate expected credit losses in future annual reports and accounts. The company explained that the key determinants in calculating expected credit losses for trade receivables are ageing and whether an indebted customer remains with the Group. Disaggregated gross trade receivables and the corresponding expected credit losses will be presented on this basis in future annual reports and accounts. Impairment charge in the year Given the materiality of the credit loss impairment charge in the year, we questioned why this had not been disclosed separately on the face of the statement of comprehensive income as required by paragraph 82(ba) of IAS 1. The company agreed to separately show the credit loss impairment charge on the face of the statement of comprehensive income in future annual reports and accounts. As the change affected a primary statement, we asked the company to disclose the fact that the matter had come to its attention as result of our enquiry. |
| Entity | The Berkeley Group Holdings plc |
| Balance Sheet Date | 30 April 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Revenue recognition We asked the company to provide further details of the revenue recognition policy applied to commercial sales and affordable housing sales. The company explained how revenue from commercial sales and affordable housing sales was recognised. The company also agreed to enhance its revenue recognition accounting policy in future reports and accounts if sales in respect of freehold affordable housing contracts were to become material. We requested further information on the way in which new property deposits, on-account contract receipts and reservation fees are measured. The company explained satisfactorily how these balances arose and the way in which they were accounted for with reference to IFRS 9, ‘Financial Instruments’ and IFRS 15, ‘Revenue from Contracts with Customers’. Significant estimates We queried whether the carrying value of inventory and profit recognition had been identified as a significant area of estimation uncertainty. We also asked the company to explain how they considered the accounts met IAS 1 ‘Presentation of Financial Statements’ disclosure requirements in respect of certain areas of significant estimation uncertainty. The company confirmed that the carrying value of inventory and profit recognition had been identified as an area of significant estimation uncertainty. The company also agreed to enhance the estimation uncertainty disclosures in respect of inventory and profit recognition, and provisions for liabilities and charges by providing sensitivity information in its future report and accounts. Alternative performance measures We asked the company to provide reconciliations for net asset value per share and pre-tax return on equity alternative performance measures (APMs) to the relevant IFRS component. We also asked the company to provide the definition for net asset value per share. The company provided the reconcilations and definitions requested and agreed to include a specific note reconciling these APMs in future reports and accounts. |
| Entity | Vodafone Group Plc |
| Balance Sheet Date | 31 March 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Parent company’s investments in subsidiaries We asked how the impairment assessments performed at a group level were adapted for the purposes of the impairment review of the parent company’s investments in subsidiaries and the extent to which separate sensitivity disclosures should be provided for the parent company. The company provided a satisfactory explanation and confirmed that there was no significant risk of material adjustment to the carrying values of the investments in the next financial year. The company agreed to amend the disclosure to clarify this and to provide additional disclosure in respect of the impairment review of the investments in subsidiaries. Review of goodwill for impairment We questioned the company about the capital expenditure assumptions made in its value in use (‘VIU’) calculations. The company provided a satisfactory analysis and confirmed that all material capital expenditure included in its VIU calculations is incurred to maintain, rather than improve, the level of economic benefits obtained from its network and infrastructure. The company agreed to amend its disclosure to clarify this judgement. Deferred tax assets We asked for further information about the nature of evidence supporting the recoverability of the deferred tax assets for tax losses in Luxembourg and Germany. We also requested the company explain how the change in tax legislation in Luxembourg in 2017 affected the assessment of recoverability of the deferred tax asset. The company provided a satisfactory analysis, which included confirmation that the change in the tax regime in Luxembourg in 2017 does not impact the recoverability of the pre tax reform tax losses for which the deferred tax asset has been recognised. |
| Entity | Watkin Jones plc |
| Balance Sheet Date | 30 September 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | September 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
This company was selected as part of our thematic review of streamlined energy and carbon reporting (‘SECR’) disclosures and, as such, only these disclosures were reviewed. Streamlined energy and carbon reporting We asked the company to explain why it had not satisfied the SECR disclosure requirements relating to emissions, energy use and energy efficiency measures, which applied for the first time to the company’s 2020 annual report and accounts. The company explained why it did not include this information in the 2020 accounts and agreed to make the required disclosures in the 2021 and future annual reports and accounts. |
| Entity | Wizz Air Holding Plc (3) |
| Balance Sheet Date | 31 March 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Sale and lease-back transactions We asked the company for further information on gains and losses on sale and leaseback transactions. The company provided this information noting that, in the year under review, total gross gains were immaterial and that no losses had been incurred. We encouraged the company to clarify its future disclosures in light of our enquiries in this area. On-board catering revenues We sought an explanation of how the company had concluded that it acts as agent, rather than principal, in respect of on-board catering services. We were satisfied with the explanation provided. Cash and cash equivalents We asked the company to explain the basis on which financial assets with an original maturity of between three and 12 months had been classified as ‘cash equivalents’. Following correspondence and discussions with the company, it agreed to separate from cash and cash equivalents deposits with an original maturity of greater than three months, even if they were accessible within three months at insignificant cost, where those deposits were being held for purposes other than meeting short-term cash commitments. In accordance with IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’, the company accounted for this change as a prior period adjustment in its annual report and accounts for the year ended 31 March 2021. As the change 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. Other enquiries In view of the proximity of our enquiries to the company’s 2021 reporting date, we asked the company to consider some observations in respect of disclosures included in its 2020 annual report and accounts and to provide, after publication of its 2021 annual report and accounts, explanations of how those matters had been addressed. The observations covered:
The company made satisfactory improvements to disclosures in its 2021 annual report and accounts. |
| Entity | Airtel Africa plc |
| Balance Sheet Date | 31 March 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Revenue recognised on customer onboarding We questioned the company’s accounting policy of recognising revenue upfront on customer onboarding. The company explained that this revenue related to the sale of mobile sim cards. As this was not a separate performance obligation, the revenue should have been deferred. However, the company further explained that neither the revenue stream in aggregate, nor the difference between this treatment and that required by IFRS 15 ‘Revenue from Contracts with Customers’, was material. The company undertook to remove this accounting policy from its 2021 annual report and accounts. |
| Entity | Alliance Pharma plc |
| Balance Sheet Date | 31 December 2019 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | June 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. Variable consideration We asked for information about the variable consideration to which the company may be entitled; particularly relating to rebates and sales-based royalties. The company provided the information requested and agreed to clarify in its 2020 accounts that estimates of variable consideration do not include amounts related to sales-based royalties. Contract balances We questioned the company about an amount disclosed as accrued income and enquired about any contract asset or contract liability balances that existed. The company clarified that the accrued income comprised unbilled receivables subject only to the passage of time, rather than a contract asset, and that there were no contract assets or contract liabilities at the year end. The company agreed to provide an accounting policy and explanation for the accrued income balance in its 2020 accounts. |
| Entity | Amerisur Resources Limited |
| Balance Sheet Date | 31 December 2018 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | Ashmore Group plc |
| Balance Sheet Date | 30 June 2020 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2021 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |