The novel coronavirus (COVID-19) continues to affect the companies in India and has created significant financial reporting and auditing challenges for the management, those charged with governance and auditors of companies. The increase in uncertainty caused by the pandemic has affected various inputs to the financial reporting process, for instance, reliable estimates and valuation of assets and also pose significant auditing challenges, such as limited access to information or people. Therefore, there is a need for companies and auditors to engage on a continuous basis for a seamless impact assessment and appropriate financial reporting. In this edition of Accounting and Auditing Update (AAU), we discuss some of the key considerations for management and auditors to continue to focus in the current environment.
To address the accounting and financial reporting impacts of COVID-19, the Financial Accounting Standards Board (FASB) has deferred the effective dates of the leases and revenue recognition standards for certain entities. Also, it has provided a simplified approach that companies may use to account for COVID-19 related rent concessions. Our article on the topic aims to summarise these developments and highlight other relevant considerations for companies under US GAAP during current times.
The Companies (Auditors’ Report) Order, 2020 (CARO 2020) is applicable for audits of companies from financial year 2020-21. CARO 2020 contains significant changes and several new reporting requirements vis-à-vis CARO 2016. Many of the requirements require exercise of judgement rather than application of a purely objective test. To provide guidance on the application of CARO 2020, the Institute of Chartered Accountants of India (ICAI) has issued a guidance note on CARO 2020. Starting this edition, we will cover a series of articles on the key clauses of CARO 2020 along with highlighting related guidance provided by ICAI. In this edition, our article covers the reporting requirements relating to property, plant and equipment/intangible assets, benami property and title deeds of immovable property under CARO 2020 and related guidance provided by ICAI.
As is the case each month, we have also included a regular round-up of some recent regulatory updates in India.