ICAEW.com works better with JavaScript enabled.

War in Ukraine: the corporate reporting implications

Author: ICAEW Insights

Published: 15 Mar 2022

ICAEW issues guidance after the Financial Reporting Faculty warns that the economic knock-on effects could be felt widely by business.

Businesses with 31 December year ends in the process of signing off their accounts may have to factor in additional disclosure within their financial and non-financial reporting as the situation in Ukraine continues to develop.

New guidance from ICAEW’s Financial Reporting Faculty highlights the financial reporting implications of the war in Ukraine for businesses of all sizes, with the Faculty warning that the economic knock-on effects could be felt extensively.

In addition to companies with trade and/or assets in Russia, Belarus or Ukraine, the economic ramifications of increases to energy prices, rising pressure on inflation rates, fluctuations in foreign exchange rates, unease in stock market trading and interest rate rises could be felt more widely, ICAEW says. 

As the situation between Russia and Ukraine continues to develop and sanctions are imposed on Russia and Belarus, companies preparing reports and accounts need to consider how this affects their business and the consequences for their financial and non-financial reporting, warn ICAEW’s financial reporting experts. 

The difficulty of assessing the conditions that existed on a particular date while the situation is rapidly evolving means that robust disclosure of judgements and estimates are essential.

The guidance stresses the importance of incorporating a comprehensive post-balance-sheet review in the year-end reporting plan, particularly as information about the scale and impact of the war changes frequently.

While tensions were rising between Russia and Ukraine in the months prior, the news of Russia’s invasion into Ukraine broke at the end of February 2022. For companies with December and January year ends, the general consensus appears to be that the war in Ukraine would be a non-adjusting post balance sheet event, the guidance says. 

“Therefore, the measurements of assets and liabilities in the accounts will not be adjusted for its potential impact (unless the impact is so far reaching that the entity is no longer considered to be a going concern). However, the nature of any material non-adjusting event and an estimate of its financial effect must be disclosed by way of a note to the accounts,” ICAEW says. 

Company directors assessing the impact of the war in Ukraine will need to consider the effect of sanctions where relevant, as well as the ramifications of the war on the supply chain in the countries in which it operates, plus the broader impact on the global economy. However, ICAEW warns that the impacts will vary according to the specific circumstances in which a business operates, not to mention where they are in their reporting cycles.

The guidance also offers pointers on impairment of tangible and intangible assets, the value of cash, inventories and other receivables, debtor recoverability and going concern, as well as dedicated guidance around narrative reporting and disclosures. Additional guidance covering some of these areas in more detail will be published by ICAEW in due course.

Marianne Mau, Head of Corporate Reporting Strategy at ICAEW, says: “We hope this high-level guidance serves as a good starting point for those currently involved in their year-end processes. Our thoughts are also very much with those affected by the war, particularly those with family and friends in the Ukraine.” 

Read our full article for more information on the corporate reporting implications of the war in Ukraine or to find out about the auditing implications of the Ukraine invasion read our article here.

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.

Corporate Reporting Faculty ident lighthouse

ICAEW latest on Ukraine and Russia

Ukraine: resources

News and features on the impact of the Ukraine crisis on accountancy, business and the wider economy, including sanctions.

Ukrainian flag against blue sky

Support for members during the Ukraine crisis

Support
Magnifying glass
Technical and Ethics Advisory Services

ICAEW Members can contact our free confidential helpline for advice and support on technical, ethical, anti-money laundering and fraud issues.

Resources
Resources for members

Chartered Accountants from across the membership have reached out to share how they are responding to the sanctions. Many are re-screening all clients with connections to Russia. Here are some of the key resources to help you respond to clients' concerns.

Doing business in ...
Guides to affected countries

ICAEW's Library and Information Service produces guides for members who are considering doing business in overseas countries. There are separate guides for Ukraine and its neighbours, all of which include updates on the latest sanctions and restrictions.

Open AddCPD icon

Add Verified CPD Activity

Introducing AddCPD, a new way to record your CPD activities!

Log in to start using the AddCPD tool. Available only to ICAEW members.

Add this page to your CPD activity

Step 1 of 3
Download recorded
Download not recorded

Please download the related document if you wish to add this activity to your record

What time are you claiming for this activity?
Mandatory fields

Add this page to your CPD activity

Step 2 of 3
Mandatory field

Add activity to my record

Step 3 of 3
Mandatory field

Activity added

An error has occurred
Please try again

If the problem persists please contact our helpline on +44 (0)1908 248 250