Companies are being warned to include the cost of the UK quitting the European Union in their financial statements by the accounting regulator the Financial Reporting Council (FRC).
Earnings season is gearing up in the UK, with most of the FTSE 100 blue chip firms set to publish their fourth quarter and full year results over the next few weeks.
The watchdog has warned that as the negotiations between Prime Minister David Cameron and European ministers continue companies must factor in the potential cost to their business if the UK does vote to leave in the coming referendum.
The date of the referendum has not yet been set although Mr Cameron has hinted it could be set this month, and for as soon as the summer this year. The government has promised there will be a vote before the end of 2017.
A spokesperson for the FRC told City A.M.:
Companies may well be considering the risks and uncertainties of the UK’s renegotiation of its EU position and potential exit. Under the Companies Act if directors consider this to be a principal risk they should disclose that to their shareholders.
The FRC said it has been approached by a number of firms who were unsure of how they should report the effects of a Brexit on their business.
“We can not tell companies what to report on this matter, it is up to them to calculate the risks,” the spokesperson added.
Spread betting firm CMC Markets, whose chief executive is a key donor to one of the groups campaigning for Britain to leave the EU, made headlines last week when it warned in market flotation documents that its profits could suffer if the UK were to leave.
Recent polls have measured the vote as evenly split over whether the UK should leave the EU.