Effect on the financial statement due to Covid 19
The world has flipped around over the most recent couple of weeks with the effect of COVID-19 spreading to organizations and individuals all inclusive. Who might have envisioned this at start of the decade? Bill Gates said in his 2015-TED talk "In the event that anything executes more than 10 million individuals in the following not many decades it's almost certain to be an exceptionally irresistible infection as opposed to war. Not rockets, however microorganisms."
Despite the fact that it is clear most organizations are influenced by COVID-19, it is very hard to evaluate the present and potential business and money related effect. There are ramifications of this unprecedented circumstance on the fiscal reports arranged under the International Financial Reporting Standards (IFRS).
Will the financial statements for the period ended 31 December 2019 be adjusted for the impact of COVID-19?
IAS 10 Events after the Reporting Period characterizes altering occasions as those that existed toward the finish of the revealing time frame. Since the effect of the infection seems to have for the most part spread in 2020, it will be a non-modifying occasion for the period finished 31 December 2019.
For organizations with 31 December multi year-end, the nature of the occasion and a gauge of the money related impact must be unveiled, if material. In the event that it is absurd to expect to assess this, an announcement with that impact is required. These organizations will show the effect on the outcomes for the quarter finished 31 March 2020. Definitely, the effect of COVID-19 will be a key conversation point in the coming quarters on the CEO/CFO gatherings and speculator calls. The Indian organizations have 31 March as their year-end and should modify their Ind AS (Indian Accounting Standards) fiscal summaries for the evaluated money related effect of COVID-19. The reviewers should reconsider the hazard evaluation of their customers.
What are the key items in the financial statements that require close attention due to COVID-19?
COVID-19 adverse affects tasks, as, interest for products or administrations, the impact on supply chains and specialist co-ops. Notwithstanding understanding an effect on top-line (income) and primary concern (overall gain), the huge zones that speculators and investigators ought to intently survey include:
· going concern assessment
· Customer receivables, including expected credit losses
· Inventory obsolescence
· Impairment of assets including goodwill
· Abnormal costs, including paid staff leave
· Impact of the government’s emergency measures
· Insurance recoveries
· Liquidity, including the ability to service debt
· Impact on future dividends and share buy-backs ·
Management disclosures on the commercial impact, future risks and uncertainties
It would be valuable for controllers to give direction on least divulgences comparable to the effect of COVID-19. This would help guarantee some consistency and similarity between organizations in a similar locale. From a business point of view, maybe numerous client and provider agreements ought to be renegotiated. This will significantly affect the figures of productivity and incomes.
Lastly, as most of us work and interact remotely in the near future, it is important that the quality of financial statements, their audit and financial analysis is not compromised. We may see extensions to the IFRS financial statements filing deadlines.
Stay confident and think positive.
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