AdminApart from the health and safety of mankind, COVID-19 has unfavourably affected the economic environment which in turn has consequential impact on the results in the financial statements and reporting.
There is also a need to advise the preparers of financial statements to ensure that the potential impact of COVID-19 is suitably considered in preparing and reporting their financial statements for the year ended March 31, 2020. Considering all the above factors, in order to guide the preparers and auditors, the Institute of Chartered Accountants of India (ICAI), Regulator of Chartered Accountancy profession in India, has developed an Advisory on “Impact of Coronavirus on Financial Reporting and the Auditors Consideration” highlighting few important areas which require particular attention in respect of financial statements for the year 2019-20. ICAI Advisory is consistent with those provided in other jurisdictions.
Specific requirements of a few Accounting Standards that may need special attention are indicated in this Accounting Advisory. The said Advisor only draw the attention of preparers to some of the important requirements of Indian Accounting Standards (Ind AS) and Accounting Standards (AS), and this is not meant to be exhaustive and may differ based on specific facts, circumstances and business of respective preparers.
The advisory has been prepared for:
1. Entities to whom Ind AS is applicable and
2. Entities to whom AS is applicable, viz,
- Companies to whom Companies, Accounting Standards Rules, 2006 is applicable and
- Non-corporate entities to whom AS issued by ICAI is applicable
Accounting advisory guides on the key areas that need to be considered during these challenging times as given below. May refer Annexure A for further details.
- Inventory Measurement
- Impairment of Non-Financial Assets such as PPE, Goodwill and Intangibles
- Financial Instruments (Impairment Losses, Fair Value Measurement and Hedge Accounting)
- Leases
- Revenue
- Provisions, Contingent Liabilities and Contingent Assets
- Modifications or Termination of Contracts or Arrangements
- Going Concern Assessment
- Income Taxes
- Consolidated Financial Statements
- Property, Plant and Equipment
- Presentation of Financial Statements
- Borrowing Costs
- Post Balance Sheet Events
- Interim Financial Reporting
Salient Points w.r.t. Auditing Advisory are:
Further, Auditors are also advised by the ICAI to carefully evaluate circumstances prevailing in their audits and assess risk accordingly when applying the concepts given in the Advisory in their audits. Following are salient feature of Auditing Advisory:
- The advisory covers the areas which require special attention of auditors in current scenario like Valuation of Inventory on a date other than date of financial statements, Audit of Consolidated Financial Statements where Components/component auditors are located in severely affected places, Subsequent Events or Events after Reporting date, Going Concern etc.
- It has been advised that auditors have a public interest obligation to complete the audit work in accordance with professional standards and ethics requirements and under the current circumstances, Auditors must recognise that the specific aspect they need to report to address the challenges and uncertainties arising out of the impact of COVID-19.
For referring to the Advisory, please visit ICAI website https://resource.cdn.icai.org/58829icai47941.pdf
