Divya Gaur shares the key accounting and reporting considerations for businesses putting together a COVID-19 impact assessment report.
“The new challenge for finance functions is to really capture all of these issues arising due to COVID-19 and their impact on financial reporting.”
COVID-19 has caused huge disruption to most businesses and this has meant there are significant impacts on accounting and reporting that need to be considered.
In our latest video on the new reality, Divya Gaur, Manager Accounting Advisory Services, shares the key considerations for finance functions and provides practical next steps for how businesses can tackle these challenges. Do you have a clear picture of the accounting and reporting risks your business faces? How will you go about capturing this information? Are you clear about the areas you need to consider?
Key considerations for finance functions
Recently, our clients have been talking to us about the following issues:
Examples of how businesses have been affected
Take the example of a company where production processes have been severely impacted leading to closure of stores and facilities. This could mean that some of the existing sale and purchase contracts may have become loss-making and require recognition of provision. Uncertainty around the enforceability of rights and obligations in customer contracts could have an impact on the timing and amount of revenue to be recognised.
What you can do
Companies should review their new circumstances and risk exposure by carefully analysing contracts such as sale and purchase agreements, lease arrangements, debt arrangements and hedging strategies. They can use this as the basis for a COVID-19 impact assessment report. This impact assessment report can then be used by entities to issue guidance around the business to deal with such accounting and reporting issues.
If you would like to find out more information on how to approach the various challenges that the current situation and changing market dynamics are creating, please visit our COVID-19 resource page or contact a member of the Accounting Advisory team.
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