Date posted: 20/03/2020

Responding to the challenges of COVID-19

CA ANZ is helping you meet the financial reporting and audit challenges posed by the global spread of COVID-19

In brief

  • CA ANZ is actively engaging with regulators to identify and develop necessary relief strategies
  • Careful thought and good planning will be needed to manage and report on the effects of this crisis
  • CA ANZ and other members of our profession have prepared a wide range of resources to help you face this unique challenge

The sweep of the novel corona virus (COVID-19) around the world is providing everyone, including the accounting profession, with a whole new range of challenges. 

CA ANZ is working with the relevant regulators in both Australia and New Zealand to identify what specific relief is needed and how this can be provided in a timely way. Our aim is to ensure that our members, particularly those in smaller practices and businesses, can meet these challenges in a practical and effective way. 

Key current topics of discussion include amending reporting deadlines to enable better management of workload, and considerations around electronic meeting restrictions.

However, even with reporting deadline relief and other practical strategies in place, the challenges of managing, and reporting on, the economic impacts of this crisis are considerable. 

All kinds of challenges are being thrown up, beginning with the basic business risks of managing the health and wellbeing of staff, managing day-to-day operations and preserving cash flow so that employees keep their jobs and businesses remain viable and do not trade while insolvent. 

There will be a greater need to examine all these risks (both financial and non-financial) and the entity’s responses as reporting seasons looms to ensure they are adequately recognised and disclosed in any financial reports. 

Falling revenue affects net realisable values of inventory and the utilisation of staff and equipment at the same time as customers may struggle to pay bills. This affects an entity’s ability to pay loans and meet debt covenants, and agreements may need to be reviewed or renegotiated.

 Government stimulus packages, and possibly some of the entity’s insurances, can help, so it will be important to consider what is available, how and when will this be accessed and how it should be accounted for. 

Then will come the harder discussions around the impairment of assets and the steps needed to ensure the entity is, and can remain, a going concern for the foreseeable future. If this is in doubt, further challenges and disclosures arise.

Entities with December year-ends are already grappling with these issues and a range of resources already exist to help them. We have compiled a list of the resources that address key business financial reporting and audit considerations (see top right link).

These have been prepared by both CA ANZ, regulators, and other members of the profession to help all of us face these challenges together in the coming months.