Impact of COVID-19 on Business, Accounting and Financial Reporting

Author: Lynn Fountain

CPE Credit:  2 hours for CPAs

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.

Publication Date: April 2020

Designed For
Business owners, Stockholders/stakeholders/shareholders, All business professionals at all levels including accounting, compliance and operational, Board members, and any individuals potentially impacted in a personal or professional way by the Pandemic.

Topics Covered

  • Examine potential disclosures strictly related to FR
  • Evaluate RA and ST/LT impact on business models:
    • Impact on organizational liquidity, human resources
    • Impact on third parties/partners
  • Discuss cyber risks related to COVID‐19
  • Discuss DR planning related to COVID‐19

Learning Objectives

  • Identify the considerations for disclosures strictly related to financial reporting
  • Recognize the need for disclosures and communications around the risk assessment process and the short-term and long-term impact on company's business model
  • Describe and evaluate how the current business stoppage may impact organizational liquidity, capital and human resources now and in the future
  • Describe considerations companies should take for performing appropriate due diligence of third parties and partners as well as global partners
  • Recognize risks that may exist for future periods and how recent events have impacted accounting processes like assessment of collectability of accounts, inventory outages, liability contingencies, liquidity policies etc.
  • Identify cyber risks that are beginning to emerge as companies navigate the impact of a large percent of their workforce being required to work remotely
  • Recognize disaster recovery planning including back-up and recovery efforts in the event information is lost or corrupted

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Accounting (1 hour), Auditing (1 hour)

Program Prerequisites
None

Advance Preparation
None

Registration Options
Quantity
Fees
Regular Fee $55.00

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