Financial reporting and audit considerations

Companies should monitor the current and potential effects that the Coronavirus outbreak may have on disclosures and should strongly consider the following five items to help ensure that their financial reporting and audit processes are as robust as possible.

Companies should consider their disclosure obligations regarding business risks related to the impacts of COVID-19 within the context of their local regulatory requirements. Disclosures should be specific to individual circumstances, avoiding broad or generic language.

Companies should consider whether economic uncertainties and market volatility have or will affect accounting conclusions. Additionally, companies should evaluate whether events occurring after the reporting period, but before the financial statements for that period have been issued, require disclosure or possibly recognition.

A company’s ability to obtain and provide financial statements or information could be impacted. Companies with significant operations in countries affected may encounter delays in receiving financial data for consolidated financial statements as a result.

Companies with significant global operations should consider whether there is any effect on internal control over financial reporting due to the local impacts of COVID-19. For example, new controls may be implemented and/or revised as companies start to modify IT access to enable remote workforces. Disclosure of material changes would need to be disclosed in ICFR.

If companies anticipate reporting or filing delays due to the outbreak or travel restrictions, they should contact their relevant local regulatory bodies to discuss the details. Failure to follow regulations and timely reporting may have consequences unless specific agreements are in place with regulators.

Additionally, depending on the region, companies can look to apply for an extension to push back its scheduled AGM and keep investors informed of any changes.