Companies have become accustomed to inflexible regulatory deadlines – unmoving targets baked into law – yet even when extensions or exemptions are possible, applying for those isn’t always easy.
Recent weeks have seen an unprecedented number of updates to guidelines giving companies more information on how to operate as the current Covid-19 crisis continues.
Many of those updates have included extended filing periods of some kind, and while this sounds like good news – particularly for companies struggling to maintain normal operations – there’s more to think about than what we may see at first glance.
As the Covid-19 situation continues to unfold, there are steps businesses and their employees can take to make sure they’re adhering to the ‘always be prepared’ motto.
Some top tips to staying prepared to meet reporting deadlines include:
Keep track of extensions
It’s hard enough to keep track of updates from different regulators in different regions, without having to account for additional last-minute updates. Many finance teams will already be subscribed to regulator newsletters and email updates, but another resource to consider comes from professional bodies and accountancy firms, who are curating lists of updates and other related resources.
Firms contracted to assist with reporting may also be able to help keep reporting teams up to date.
For the more technologically adventurous, subscribing to RSS feeds is also a great option for keeping informed. RSS is an XML format allowing users to automatically subscribe and have news sent to them, via software such as Feedly, rather than having to check individual websites.
Be aware of additional obligations
In addition to deadline extensions, many regulators have also issued guidance on further disclosure related to COVID-19 impacts. This includes communication related to additional business risks, actual and potential impact of the crisis, and significant judgements made while preparing financial statements.
Some additional disclosures are required immediately where possible, while others are deferred until interim or following reporting periods.
Work to existing deadlines where possible.
For many companies, extension periods are a mixed blessing. Reporting early is often seen as a positive action from a company, and many will want to continue doing so to show resilience in a time of uncertainty. Remote working may make this difficult for some but many companies have started moving operations to cloud-based software, which offers better business continuity.
Some regulators have requested that filings continue to the current schedule as much as possible, while also indicating that some leeway will be possible, as opposed to providing specific extension periods. For example, in a few cases it won’t be possible to work to existing deadlines, the Financial Conduct Authority (FCA) not only extended deadlines but also issued a moratorium on publishing preliminary results, alleviating pressure on businesses.
Communicate with auditors and investors
In some cases, delayed filing deadlines are to allow additional time for audit as well as reporting teams. This doesn’t mean that auditors necessarily have additional capacity, rather they’re facing the same restrictions as reporting teams in addition to working to adjust processes for evidence gathering and review, as well as how they should be looking at additional Covid-19 disclosures.
Regulators have issued updated guidance for auditors as well as companies, and with companies still on the same, albeit shifted, timelines, planning and communication with auditors remains essential.
The other side of this is, of course, reporting for investors. If there are expected delays, it’s essential that companies make sure that their investors remain up to date. Recent guidance from ESMA on issuer reporting deadlines specifically called out the need for investor communication.
Recommended actions for market participants included a suggestion that issuers disclose any potential impact from COVID-19 as soon as possible, particularly in reference to fundamentals, prospects or financial situation in accordance with their transparency obligations.
Improve oversight of progress and timelines
Tracking regulatory updates is one task, but keeping track of changes to those deadlines and communicating them to relevant remote staff is another.
Keeping a process of oversight in place is an additional challenge, but a crucial element in ensuring timelines are met. Implementing tools to streamline workflows is an easy way to ensure colleagues stay on track.
Tools like automatic alerts can remind co-workers of upcoming deadlines, and cloud operations mean more transparent collaboration for employees and businesses. Tools like this can be helpful in keeping teams on track, even when they’re working separately within or across markets.
As regulatory deadlines continue to shift, it will be important for companies to try and maintain a steady drumbeat of work and production, lest they be caught out in this ‘new normal’ of reporting.
We can expect more uncertainty in the coming weeks as the Covid-19 crisis continues to unfold, but by being mindful about a few of the above items, companies can survive by mainlining business as usual.
Andromeda Wood, Senior Director of Data Modelling, Workiva