March 20, 2020
Published: Journal of Accountancy
By Ken Tysiac
As the coronavirus outbreak puts pressure on health care systems and wreaks havoc on businesses throughout the world, the duty of financial statement preparers and CPA practitioners remains the same.
Regardless of the changing environment, preparers need to make sure the information their organizations present on financial statements is reported in accordance with GAAP. Auditors and practitioners are similarly concerned about the information presented in their clients’ financial statements. In many cases, though, this information is quite different from what would be reported during ordinary times.
To help preparers and practitioners be faithful to GAAP in this unusual environment, the AICPA’s Center for Plain English Accounting has produced a special report that is free to the public and available on the AICPA website. In Consequences of COVID-19: Financial Reporting Considerations, the AICPA’s national accounting and auditing resource center describes: – –
How entities may need to evaluate whether the consequences of the coronavirus outbreak represent subsequent events under FASB Accounting Standards Codification (ASC) Topic 855, Subsequent Events.
How assumptions and data supporting certain accounting estimates may be affected by the consequences of the coronavirus.
Asset impairments that the coronavirus may cause for some entities.
Loss contingencies that may need to be considered due to the effects of the coronavirus.
Going concern considerations in the current environment.
The effects that modifying lease agreements in this environment may have on financial reporting.
Potential effects of the coronavirus on variable consideration under FASB’s new revenue recognition standard.
How the coronavirus may affect risks and uncertainties disclosures under ASC Topic 275, Risks and Uncertainties.
How the probability of a hedged forecasted transaction and the amounts involved may be affected by the outbreak.
When an auditor may conclude that it is appropriate to include an emphasis-of-matter paragraph in the auditor’s report.
For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page.