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 | Utilico Emerging Markets Trust plc |
|---|---|
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice | N/A |
| Entity | Vesuvius plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | Virgin Wines UK PLC |
| Balance Sheet Date | 1 July 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Transactions with WineBank customers We requested information about how the company accounts for transactions with WineBank customers, in particular, how it determined the provision for the material right of customers to a future discount against purchases. We closed our enquiry after the company provided satisfactory explanations and agreed to include additional information in its narrative disclosures in its 2023 report and accounts about the nature of the provision, the basis on which it is determined and where it is included in the balance sheet. We also observed that it was unclear if the material rights provision represented a significant source of estimation uncertainty with a significant risk of a material adjustment in the next year, in accordance with paragraph 125 of IAS 1 ‘Presentation of Financial Statements’. The company agreed make a clear distinction between required disclosures under paragraph 125 for significant sources of estimation uncertainty, and voluntary disclosures of other uncertainties. The company also agreed to include the information required by paragraph 129 of IAS 1 about the judgements made about the future and other sources of estimation uncertainty. We questioned how the company determined that a creditor in respect of amounts received from WineBank customers met the definition of a contract liability, as defined in IFRS 15 ‘Revenue from Contracts with Customers’, and did not fall within the scope of IFRS 9, ‘Financial Instruments: Classification and Measurement’. The company satisfactorily responded to our enquiries. Classification of amounts due from Group undertakings We sought clarification of the basis on which amounts owed by group undertakings were classified as current assets in the parent company balance sheet. The company satisfactorily responded to our enquiries and undertook to review the appropriateness of the classification of the amounts owed in its 2023 annual report and accounts. |
| Entity | W.A.G Payment Solutions plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Revenue Recognition We asked the company to provide further information about the factors they considered in concluding that they were acting as principal in fuel sales within the Eurowag acceptance network. They company provided the information requested and agreed to enhance disclosure of the judgement involved in its 2023 Annual Report and Accounts. TCFD disclosures We asked the company to clearly explain in its future reporting the extent to which it believed its Taskforce for Climate-related Financial Disclosures (TCFD) disclosures were consistent with the requirements of the Listing Rules, and how they felt the disclosures could be improved. The company explained how it was planning to improve these disclosures in future reports. Software as a service The company had capitalised significant internal software development costs, and we questioned whether any of these costs related to ‘Software as a Service’ arrangements, and if so, how the company has accounted for any customisation or configuration costs associated with these arrangements. The company provided a satisfactory response. Factoring of receivables We asked the company how it used factoring for its own working capital management purposes and in contractual arrangements with customers. The company provided a satisfactory response to our queries and agreed to enhance disclosures in its 2023 Annual Report and Accounts and to clearly delineate factoring for working capital management from factoring services to customers. Deferred and contingent consideration We asked the company to reconcile amounts recognised on the balance sheet relating to deferred and contingent consideration on business combinations to the amounts included in the notes to the accounts, and to provide further details of the circumstances in which the contingent consideration would be payable. The company provided a satisfactory response to our queries. Ultimate controlling party We queried if the company considered Mr Vohanka, its CEO, to be its ultimate controlling party, and the factors it had considered in reaching this decision. The company clarified that it did not consider Mr Vohanka to be the ultimate controlling party and agreed to provide disclosure of this judgement, and the rationale, in its 2023 Annual Report and Accounts. |
| Entity | Wincanton plc |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice | N/A |
| Entity | Wizz Air Holdings Plc |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | XPS Pensions Group plc |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2024 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice | N/A |
| Entity | ASOS Plc |
| Balance Sheet Date | 31 August 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Post balance sheet event: change to the Group operating model The company had recognised significant inventory write-downs as non-adjusting post balance sheet events due to changes made to the Group operating model. We asked whether these write-downs, and the prices subsequently achieved on inventory sold through off-site clearance routes after the balance sheet date, were indicative of the value of the inventory at the year-end. The company provided an adequate explanation of why the inventory write-down was a non-adjusting post-balance sheet event. Movements in the inventory provision We asked for details of any inventory write-downs or reversals of write-downs in the year. The company responded satisfactorily to our enquiry and agreed to enhance its disclosures in its next annual report. Going concern We queried whether significant judgement had been applied in the determination that there were no material uncertainties over going concern. The company explained why it had concluded no significant judgement had been made. Nevertheless, we noted that there was a degree of judgement in this conclusion and the company agreed to carefully consider, in its next annual report, whether the assessment of going concern involved significant judgement. We also asked for further details of the base case assumptions used in the going concern assessment. The company agreed to disclose quantified base case assumptions for both the going concern assessment and the viability statement in its next annual report. Discount rate (dilapidations provision) We asked the company to clarify how the discount rates for the dilapidations provision had been determined. We also asked for an explanation of a material movement relating to the effect of movements in the discount rate. The company provided the information requested and agreed to revise its accounting policy description and enhance the related disclosures in future annual reports. |
| Entity | Bank of Georgia Group PLC |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | December 2023 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice | N/A |
| Entity | Billington Holdings Plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | December 2023 |
| Auditor (5) | Grant Thornton UK LLP |
| Case Summary / Press Notice | N/A |
| Entity | Britvic plc (3) |
| Balance Sheet Date | 30 September 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2023 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Share repurchase arrangements We asked the company to clarify the terms of its share repurchase arrangements and received a satisfactory response. The company agreed to enhance its accounting policy disclosure for any future share buybacks. Classification of intercompany loans receivable by the parent company We sought an explanation for the classification of all intercompany loans receivable by the parent company as current assets. The company acknowledged that a large part of the overall balance was not expected to be realised within 12 months of the balance sheet date and, accordingly, should be presented as non-current assets. The company agreed to revise the presentation and restate comparative figures in its 2023 annual report and accounts. Presentation of overdrafts and cash and cash equivalents We also noted that a reference to cash pooling in the notes to the financial statements did not state the extent (if any) of off-setting financial assets and liabilities. Having reviewed its arrangements, the company concluded that positive and negative balances in the cash pooling facility did not meet the criteria for net presentation. The company is revising its treatment of these balances and will restate comparative figures in its 2023 annual report and accounts, to show the gross amounts for overdrafts and cash and cash equivalents. Since these restatements affect a primary financial statement of the parent company and consolidated group, respectively, the company agreed to disclose in its 2023 annual report and accounts the fact that the matters had come to its attention as result of our enquiry. |
| Entity | Bunzl plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Consolidated cash flow statement and movement in net debt We requested more information about an amount described as realised losses on foreign exchange contracts included as a financing cash outflow in the consolidated cash flow statement, and a non-cash movement with an identical description and amount included in the movement in net debt. The company satisfactorily explained that the cash outflow related to the settlement of foreign currency forward contracts related to financing liabilities, and that the non-cash movement related to the valuation loss in relation to the same contracts. The company agreed to improve the clarity of the disclosure by amending the description of the cash outflow on the face of the consolidated cash flow statement accordingly. Amounts owed by group undertakings We sought clarification of the basis on which amounts owed by group undertakings were classified as current assets in the parent company balance sheet. The company satisfactorily responded to our enquiries. |
| Entity | Capricorn Energy PLC |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | December 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | Clifford Chance LLP |
| Balance Sheet Date | 30 April 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Revenue recognition We requested information about the nature of contingent matters affecting consideration and the process for estimating variable consideration. The LLP provided the requested details and satisfactorily explained the factors considered in applying the revenue constraint. We asked the LLP to describe the input method used for measuring progress towards satisfying the performance obligations for fixed and capped fee contracts. It provided the requested description and agreed to explain the method used in its next annual report and accounts. For the two matters above, we questioned whether there were any judgements made, or sources of estimation uncertainty relating to, the measurement of the related contract assets or liabilities that would require disclosure in accordance with IAS 1, 'Presentation of Financial Statements'. The LLP provided a satisfactory response as to why it did not consider this to be the case. We sought an explanation of the nature of the external disbursements excluded from revenue and the basis on which the LLP had concluded that it acts as agent, rather than principal, for such services. The LLP provided a satisfactory response and agreed to clarify that it acts as agent for such arrangements in its 2023 annual report and accounts. Costs for claims We requested information about the amounts recognised in relation to claims by clients, and regulatory investigations or proceedings, and asked the LLP to explain why the related costs were presented as an accrual rather than as a provision. We also asked the LLP to clarify the accounting policy applied to the cost of claims covered by its professional indemnity insurance. The LLP provided the requested amounts and satisfactorily explained its accounting policy for amounts recoverable from its professional indemnity insurance. It acknowledged that the obligation for such claims should be recognised as a provision but explained that it did not consider this matter to be material for the year ended 30 April 2022. Restatement of the LLP’s individual financial statements We asked the LLP to provide further information about a prior year restatement of the LLP’s individual financial statements. The LLP confirmed that it related to the correction of a prior year error in respect of intra-group accounting entries. It acknowledged that it had continued to investigate the matter during the year ended 30 April 2023. The LLP explained that, as a result, of this exercise, it had concluded that another restatement of the LLP’s individual financial statements was required to correct the matter. The LLP agreed to disclose further information to explain the restatements in its annual report and accounts for the year ended 30 April 2023. We also asked the LLP to clarify the basis on which it considered the LLP’s profit share arrangement with members to be discretionary, for which it provided a satisfactory response. |
| Entity | Darktrace plc |
| Balance Sheet Date | 30 June 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2023 |
| Auditor (5) | Grant Thornton UK LLP |
| Case Summary / Press Notice |
Sales arrangements that involve channel partners (‘reseller partners’ or ‘distributors’) We asked for further information about sales made through channel partners as the contractual arrangements between the company, channel partners and end-customers were unclear. We closed our enquiry after the company provided relevant explanations and agreed to enhance the accounting policies and judgements presented in its 2023 annual report, which is now publicly available. Opt-out provisions included in sales contracts We asked the company to explain its accounting for sales contracts where customers have the right to opt-out within six months of the commencement date. We closed our enquiries after it described its accounting policy and explained that sales contracts where opt-out rights had not yet expired at the reporting date did not have a material impact on revenue recognised during the year. Alternative Performance Measures We asked for an explanation of the difference between total Remaining Performance Obligations (‘RPO’) of $1,003.9m and the equivalent IFRS 15 disclosure of $1,069.0m. The company explained that part of the difference was due to a $32m error in the compilation of the latter amount and agreed to correct the disclosure in its 2023 annual report, which is now publicly available. It also explained the remainder of the difference and agreed to enhance the relevant disclosures in its annual report to help users understand any differences between the measures. We also asked for an explanation of the difference between the short-term portion of RPO of $438.0m and Annual Recurring Revenue (‘ARR’) of $514.4m. We closed our enquiry after the company gave satisfactory explanations and agreed to consider enhancing the relevant disclosures provided in its 2023 annual report. Share repurchases We asked how the directors were satisfied that share repurchases conducted during the year were lawful, given that, contrary to the requirements of the Companies Act, the company did not file interim accounts at Companies House to support the transactions. We closed our enquiry after the company acknowledged that it had not filed relevant interim accounts prior to the share repurchases and it explained that it was consulting its professional advisers to determine the appropriate actions to rectify the situation. Independent review of financial processes and controls We observed that the company separately announced that it had commissioned an independent third-party review of its key financial processes and controls (‘the Review’), and we asked it to inform us if new or revised information that is of relevance came to light. The company subsequently provided us with a copy of the findings of the Review, and we closed our enquiries after it satisfactorily explained its basis for concluding that the findings did not affect its 2022 and earlier accounts. |