The FCA gives temporary to companies reporting relief during Covid-19

August 19, 2020

The Financial Conduct Authority (FCA) will give temporary relief for lease issuers to obey with new accounting rules during the coronavirus pandemic.

The International Accounting Standards Board (IASB) published an amendment to International Financial Reporting Standard (IFRS) 16in regards to Covid-19-related rent concessions.

The changes provided practical relief to lessees in accounting for rent concessions granted due to Covid-19.

This amendment is effective for reporting periods beginning on or after 1 June 2020 in relation to Covid-19-related rent concessions that reduce lease payments due on or before 30 June 2021.

However, the amendment is not yet formally adopted in line with the necessary EU endorsement procedure. This, the FCA says, means that it “is therefore not available for use by any issuers required by the Transparency Directive to use EU-adopted IFRS in their annual or interim financial statements.”

“We appreciate the practical difficulties such issuers would face in applying the existing IFRS 16 lease modifications requirements to Covid-19-related rent concessions and welcome international action to provide a uniform response to addressing these difficulties,” the FCA added.

In regards to how long this relief will remain, the FCA said the “policy is intended to be temporary while the UK faces the disruption of the coronavirus pandemic and its aftermath.”

“We will keep its application under review,” the regulator continued. “However, we intend it to be in place until the amendment to the standard is formally adopted. Should the European Parliament or the European Council object to the adoption of the IFRS 16 amendment before the end of the Transition Period, we will end this temporary relief.”