COVID-19 Reporting, Audits and Payroll for Accounting Professionals (Currently Unavailable)

Many organizations take their accounts payable function (along with most others) for granted until suddenly, they can’t get an invoice to a critical vendor paid. Or, as many are finding out the hard way, their accounts payable team can’t get into the office to pick up all the paper invoices that need to be processed. This has happened for a few days in the past, mainly due to weather-related incidents. But they pass fairly quickly and it’s easy to play catch up. This time is different and it has highlighted the areas where the current process is not sufficient.

As the COVID-19 virus spreads, CPA firms are working to identify unique and innovative ways to ensure staff follow auditing standards while working remotely. This can present a challenge especially when organization employees are spread out in various locations and also working remotely. The ability to make requests, access information, conduct interviews and review documents all create challenges when ensuring the audit work follows audit standards and best practices. The challenges faced by CPA firms in some respects can be unique due to the sensitivity and importance of financial reporting as well as internal controls over financial reporting. This extends from efforts such as examining accounting processes that may need extra attention to adequately performing internal control risks assessments and maintaining strong documentation practices. It also extends to the potential increased risk for fraud due to the changing economic landscape.

In recent weeks, the COVID-19 Pandemic Crisis has taken our personal and business world by storm. Stock market volatility, business closures and State mandated restrictions on businesses are at a level previously never seen. The potential short-term and long-term impacts are difficult to assess and predict. Companies have been forced to change the way they operate on a daily basis. Many organizations have closed their doors for a period of time and are instructing professionals to work from home. Much of this response has been reactive and swift making the concern for future impact large due to the lack of time taken to properly risk assess the issue and the impact of these actions. In February 2020, the SEC urged issuers to work with their audit committees and auditors to ensure their financial reporting, auditing and review processes meet the applicable requirements. They emphasized the need to consider potential disclosure of subsequent events in the notes to the financial statements. On March 13, 2020 the SEC staff published guidance to assist public companies, investment companies, shareholders, and other market participants affected by COVID-19 with their upcoming annual shareholder meetings. To address potential compliance issues, the Commission issued an order that provides publicly traded companies with an additional 45 days to file certain disclosure reports that would otherwise have been due between March 1 and April 30, 2020. The SEC also reminded companies to provide investors with insight regarding their assessment of, and plans for addressing, material risks to their business and operations resulting from COVID-19 to the fullest extent practicable to keep investors and markets informed of material developments. However, it is important to note that disclosures appear in 10Q’s and 10K’s. For December 31 filers, the first quarter 10Q will provide more insight into how companies are assessing and responding to the risk of the virus on their business model. So the question becomes, what and how much should companies be required to disclose? We must also acknowledge this crisis is still in its early stages and financial statement disclosures are potentially one of the lower concerns on the radar of organizations. However, as the Pandemic evolves, all professionals will want to understand concepts that impact more than just financial reporting.

The quick onset of the COVID-19 Pandemic has resulted in organizations trying to react quickly to government and legislative mandates for all aspects of operations. This reaction has caused many complications and logistical issues in many areas including adequate preparation and management of payroll. Personnel and payroll are critical to all businesses. The payroll process includes a multitude of factors including pay rates, employee classification, sick leave, paid time off, withholdings, taxing, benefit plans and other elements that impact workers. On March 18, 2020, President Trump signed the Families First Coronavirus Response Act into law, authorizing certain relief to employees and small and midsize businesses pertaining to the COVID-19 pandemic. On March 27, the CARES Act was signed in to law providing a 2 trillion dollar relief package. The March 18 Act is intended to help the U.S. supply businesses and tax-exempt organizations with less than 500 employees with sufficient funds to provide employees with paid leave mandated taken in connection with the pandemic related to employees’ health condition or to provide care for family members. The funds are taken through tax credits. In addition to legislative issues, companies must pro-actively manage all aspects of their payroll process from managing exempt and non-exempt personnel, to layoffs and furloughs, to paid benefits and taxing issues. The payroll process is one considered “inherently” at high risk for fraud. In this time of crisis, companies will need to be pro-active with their internal controls surrounding this process.

Presented by Miles Hutchinson this course provides an overview of post implementation issues and lessons learned from the new lease standard (ASC 842) and the new credit losses standard (ASC 326). The new lease standard was effective for calendar year public business entities in the first quarter of 2019 whereas the new credit losses standard is effective one year later in January 2020. Each of these standards, since their respective initial release dates, have been subject to additional clarifying accounting standard updates as well as additional guidance provided by various standard setters and other impacted stakeholders.

This course assists professionals with helping organizations or informing clients of recent legislation to provide relief to businesses facing the challenges of COVID-19. It provides an overview of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and discusses certain provisions that provide relief to different businesses. In the framework of the catastrophic impact of COVID-19 on business activities around the world, the following topics will be addressed: (i) considerations that public companies should keep in mind while assessing and factoring the current and potential impact of the coronavirus and its related risks on their businesses and their reporting and disclosures practices, (ii) challenges for life sciences companies, (iii) U.S. employment considerations, (iv) the impact of COVID-19 on mergers & acquisitions transactions, and (vi) bank regulatory relief.