COVID-19 is having a devastating effect on people’s health, way of life and the economy. Many businesses are suffering from the consequences of the pandemic as it continues to affect their ability to trade. Some will be seeking new opportunities and perhaps investing while success is particularly uncertain.
Directors will need to consider how to reflect the impact of COVID-19 on not just the numbers but also the disclosures in the financial statements. Also, they should be mindful of the risk that COVID-19 is used as an opportunity by some reporting entities to bury bad news with 'big bath' or 'kitchen sink' provisions.
To help navigate the impact of COVID-19 on businesses, ICAEW has prepared six key business questions. These can be asked by management or their auditors to enable a conversation about the big-picture factors affecting a business this year. The questions provide a bridge into detailed accounting consequences (see below) but can also be used to keep perspective and a focus on the most material issues. This bridge is not intended as a disclosure checklist but rather to highlight factors to consider and resources to help provide a path through to robust reporting for 2020/21, avoid last-minute surprises, and ensure reporting is fair, balanced and understandable.
Six Questions for 2020 Year-Ends
COVID-19 is having a devastating effect on people’s health, way of life and the economy. Many businesses are suffering from the consequences of the pandemic as it continues to affect their ability to trade. Some will be seeking new opportunities and perhaps investing while success is particularly uncertain.
Directors will need to consider how to reflect the impact of COVID-19 on not just the numbers but also the disclosures in the financial statements. Also, they should be mindful of the risk that COVID-19 is used as an opportunity by some reporting entities to bury bad news with 'big bath' or 'kitchen sink' provisions.
To help navigate the impact of COVID-19 on businesses, ICAEW has prepared six key business questions. These can be asked by management or their auditors to enable a conversation about the big-picture factors affecting a business this year. The questions provide a bridge into detailed accounting consequences (see below) but can also be used to keep perspective and a focus on the most material issues. This bridge is not intended as a disclosure checklist but rather to highlight factors to consider and resources to help provide a path through to robust reporting for 2020/21, avoid last-minute surprises, and ensure reporting is fair, balanced and understandable.
Article series: 2020/21 Reporting Season
The above article is part of a series looking at the challenges of the corporate reporting season in 2020/21. The series aims to examine what shareholders, investors and other stakeholders want from corporate reporting at this difficult time.
Wellbeing in the 2020/21 reporting season
With the 2020/21 reporting season likely to be difficult for many, ICAEW reminds members of the resources available to them and their families from CABA. The Audit and Assurance Faculty are sharing their webinar on maintaining wellbeing during audit busy season broadcast on 11 January 2021.
ICAEW Know-How from the Corporate Reporting Faculty
This guidance is created by the Corporate Reporting Faculty – recognised internationally as a leading authority on financial reporting. The Faculty formulates ICAEW policy on financial reporting issues and makes submissions to standard setters and other external bodies. Join the Faculty to access exclusive technical resources and practical know-how.
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