COVID-19 has not only affected the health of people across the globe but has also caused severe disturbances in the global economic environment which has a consequential impact on financial statements and its reporting.
As there has been a significant impact on businesses, professionals are advised to evaluate the impact of this disruption on the financial statements.
ICAI has issued accounting advisory on speciﬁc requirements of a few accounting standards that may need special attention from preparers of the financial statements, to ensure that the impact of COVID-19 is suitably considered in preparing and reporting of the ﬁnancial statements for the year ended March 31, 2020.
How CA Professionals have to deal with statutory compliances and deadlines in this terrible outbreak.
- Restriction on traveling and the number of people working together has massively impacted the audit work and thus delaying the finalization of statutory audit reports. As March to May is the peak period for auditors due to annual audit and quarterly review, the extension provides a breathing space to statutory auditors.
- Timelines for crucial audit activities like inventory verification and valuation would be impacted. Impairments may go higher and a question would arise whether they can be treated as an extraordinary event or not.
- The extended timeline for FY20 will have a spillover effect for auditors working on financial reporting for the first quarter of FY21. The market regulator hasn’t provided any specific relief for the first quarter of the next fiscal. “This is a one-time hazard and auditors will have to make up for the lost time.”
- Chartered accountants handling personal tax compliances of individual may get relief as individuals can complete their tax-saving exercise for the ongoing financial year 2019-20 by June 30, 2020. This will save them from the heavy rush in the last few days of March.
- Last but not the least, the auditor will have to have serious discussions on the following topics with their clients:
· What are the impact of the epidemic on demand for services and products, access to raw materials and components, and staffing?
· How far is the cash?
· What is the impact of the promised support measures on an individual customer?
· Lastly, Evaluating business continuity and properly report its effects will be challenging for the professionals.