Global outbreak of COVID-19 i.e. Coronavirus continues to impact the economies causing unprecedented crisis. The pandemic has impacted finances, apart from effects on results of operations, liquidity situation, future periods and capital resources. This is pushing the economies towards recession while decreasing consumer confidence, consumption levels, trade, productivity etc.
It is important for the companies to comprehend and reflect upon Covid-19’s accounting implications. In general, the companies are obliged to include in their December,2019 year end report specific disclosures of matter(s) that have significantly affected or could significantly affect operations i.e. information on the actual and potential impact of Covid-19 on their business, fiscal situation and prospects. These assume more importance if the entities are Chinese or are having significant business relationships with China.
Auditors are tasked with greater expectation to play an active role in driving up the quality of financial reporting. We at Crowe, UAE are working with regulators and stakeholders to promote a culture of improvement. As part of our commitment in helping bridge the expectations gap, we attempt to highlight briefly the crucial matter of accounting implications of Covid-19.
Key Impact Areas – Brief snapshot
1.Adjusting (or Non-Adjusting Event)
5.Fair Value Measurement
6. Expected Credit Losses Measurement(ECL)
9.Onerous contract provisions
alternative manpower arrangements at high prices
Director - Financial Services