Reporting the Impact of COVID-19 to your Business

This accounting alert is issued to highlight ten questions entities should be asked to ensure that financial statements not yet issued are presented fairly.

Introduction

As the impact of a novel strain of coronavirus (COVID-19) continues to unfold around the world, those individuals responsible for preparing financial statements and approving them for issue need to be cognizant of not only what has happened and is happening at the reporting date and the time the financial statements are approved, but also what is likely to happen next.

This article highlights ten questions entities should be asked to make sure that those financial statements not yet issued are presented fairly. These questions are by no means exhaustive, or indeed listed in any order of priority, because their applicability will depend on facts and circumstances.

Ten Key Questions for CFOs

1. COVID-19 – the big picture: what should be included in financial statements that have not yet been authorized and approved for issue?
2. Will the outbreak of COVID-19 result in more disclosures?
3. There has recently been a significant drop in the value of equities so if you have a December 31, 2019 reporting date, should your financial statements be adjusted for this?
4. If there is estimation uncertainty, what should be reported in the financial statements?
5. How does information about COVID-19 that becomes available after the reporting date affect the financial statements?
6. Is it reasonable to take the view 'the more uncertain the environment, then more detailed disclosures of the assumptions and assessments used to prepare the financial statements should be made'?
7. When assessing expected credit losses, what should be taken into consideration?
8. What should be taken into consideration when determining fair values at a reporting date?
9. How much attention needs to be given to going concern for COVID-19?
10. Ultimately, what impacts of COVID-19 will the users of the financial statements be most interested in?

PFRS requires that all the material effects of COVID-19 are appropriately recognized, measured and disclosed at the entity’s reporting date; be it interim or at year-end.

 

 

See attached article for the answers to these questions in this publication.