20RU-010 Supporting flow of credit during COVID-19: financial reporting impacts
20RU-010 Flow of credit during COVID-19: Reporting
As part of their economic response to the coronavirus pandemic, the Australian Government, its agencies and the banking industry itself are taking actions to ensure the flow of credit continues through the economy. In particular the measures are focused on ensuring small and medium enterprises (SMEs) continue to be able to access credit as this will be critical to their ability to survive and emerge from the other side of this crisis. This publication provides an overview of the associated accounting implications of these programs for both the lender and the borrower.
Key points
- The Australian Government and the banking industry are taking steps to support the flow of credit
- Key programs include the SME loan guarantee, the RBA funding facility, and a fund set up to purchase asset backed securities
- Other measures include the easing of compliance and administrative pressures
- The accounting implications arising from these measures can vary and may require careful consideration for both lenders and borrowers.
In summary
As part of their economic response to the coronavirus pandemic, the Australian Government, its agencies and the banking industry itself are taking actions to ensure the flow of credit continues through the economy.
In particular the measures are focussed on ensuring small and medium enterprises (SMEs) continue to be able to access credit as this will be critical to their ability to survive and emerge from the other side of this crisis.
Understanding the financial reporting impacts
The financial reporting impacts from these initiatives will vary depending on the nature of entity (i.e. whether it is a lender or a borrower) and the schemes in which they choose to participate. However, some common themes amongst the different measures which may require consideration include:
- Whether a government grant needs to be recognised or whether the receipt of government assistance needs to be disclosed
- The amount at which financial assets or liabilities are recognised, and
- Disclosures about the impact these schemes may have on the exposure to, and management of, financial risks.
This Reporting Update (PDF 207.8KB) provides a background to each of the key initiatives as well as information about the key impacts that each scheme may have on financial reporting for both lenders and borrowers.
“The Australian Government and the banking industry are focused on ensuring that businesses are able to continue accessing credit during the current crisis and have announced a number of different initiatives aimed at achieving this objective. For borrowers and lenders participating in these programs, consideration will need to be given to the potential accounting implications – not just in terms of recognition and measurement but also in terms of disclosures, which will be important during these uncertain times”. Patricia Stebbens |
KPMG Australia acknowledges the Traditional Custodians of the land on which we operate, live and gather as employees, and recognise their continuing connection to land, water and community. We pay respect to Elders past, present and emerging.
©2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.
Liability limited by a scheme approved under Professional Standards Legislation.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.