The impact of Covid-19 is evolving rapidly. The pandemic has required entities in many different countries to limit or suspend business operations and implement travel restrictions and quarantine measures. Businesses are dealing with lost revenue and disrupted supply chains. The disruption to global supply chains due to factory shutdowns has exposed the vulnerabilities of many organisations.
The Covid-19 outbreak has also resulted in significant volatility in the financial and commodities markets worldwide. There are already signs that the virus has significantly impacted the world economy. Various governments have announced measures to provide both financial and non-financial assistance to the disrupted industry sectors and the affected business organisations.
As the Covid-19 outbreak continues to progress and evolve, it is challenging at this juncture to predict the full extent and duration of its business and economic impact. Consequently, these circumstances have presented entities with challenges when preparing their IFRS financial statements.
This publication provides a reminder of the existing accounting requirements that should be considered when addressing the financial effects of Covid-19 when preparing IFRS financial statements for the annual or interim reporting periods ending in 2020. Disclosure considerations for interim financial reporting are also covered in this publication. The issues discussed are by no means exhaustive and their applicability depends on the facts and circumstances of each entity.
Banks and their auditors have to carefully assess the appropriate application of the accounting rules, taking into consideration the unprecedented nature of the crisis, the high degree of uncertainty in generating reasonable and supportable forecasts and the significant economic measures introduced by governments all over the world.
The financial reporting issues, reminders and considerations highlighted in this publication are the following:
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