Audit & Accounting in
the Age of Covid-19

1. IFRS 9 and COVID-19—accounting for expected credit losses, guidance published March 27, 2020. The guidance “does not change, remove nor add to, the requirements in IFRS 9 Financial Instruments. It is intended to support the consistent and robust application of IFRS 9… The document acknowledges that estimating ECL [expected credit losses] on financial instruments is challenging in the current circumstances and highlights the importance of companies using all reasonable and supportable information available—historic, current and forward-looking to the extent possible—when determining whether lifetime losses should be recognised on loans and in measuring ECL. The document reinforces that IFRS 9 does not provide bright lines nor a mechanistic approach in accounting for ECLs. Accordingly, companies may need to adjust their approaches to forecasting and determining when lifetime losses should be recognised to reflect the current environment.”

1. COVID-19 Resources from IFAC's Network – link - https://www.ifac.org/knowledge-gateway/series/covid-19-resources-ifacs-network
2. International Auditing and Assurance Standards Board (IAASB) - Audit Considerations Arising from Changes Due to COVID-19, staff alert issued March 27, 2020, “highlights some of the more significant areas that may need to be further considered in designing and performing audit procedures to obtain sufficient appropriate audit evidence, and to report accordingly.

1. Coronavirus Information and resources – link - https://www.accaglobal.com/us/en/cam/coronavirus.html

1. Update on the Coronavirus and Impact for Association Activities – link - https://www.cimaglobal.com/Members/Update-on-Coronavirus/

1. Workforce Principles for the COVID-19 Pandemic: Stakeholder Capitalism in a Time of Crisis, White Paper published March 31, 2020. “While there currently is a significant focus on the public health and economic impact of the COVID-19 pandemic, the workforce and societal implications are no less profound. The guiding principles and the four workforce management imperatives outlined in this document are a preliminary response to the unfolding crisis. They are intended to serve as a tool for Chief Human Resources Officers (CHROs) and other business leaders. While businesses may need to adjust measures according to different policy environments, the concept of stakeholder capitalism can provide a framework for a responsible course of action at this pivotal moment.”
2. Outbreak Readiness and Business Impact Protecting Lives and Livelihoods across the Global Economy,White Paper originally published in January 2019, “highlighted the growing risk of infectious disease and cautioned businesses that pandemics were worryingly underrepresented in considerations of risk. It proposed tailored insights on the impact of outbreaks, offering strategies for effective response and resilience.” Updated at https://www.weforum.org/reports/outbreak-readiness-and-business-impact.
3. The COVID Action Platform – link - https://www.weforum.org/platforms/covid-action-platform - will focus on three priorities: 1. Galvanize the global business community for collective action. 2. Protect people’s livelihoods and facilitate business continuity. 3. Mobilize cooperation and business support for the COVID-19 response.

1. Bulletin: Guidance for Auditors and Matters to Consider Where Engagements Are Affected by Coronavirus (COVID-19), issued March 26, 2020. “It is driven by two factors: In order to be able to give an audit opinion that is not subject to a disclaimer or qualification due to a scope limitation, the auditor must always obtain sufficient, appropriate audit evidence; Even in challenging times, the flow of high quality, independently assured information to support the functioning of capital markets is of fundamental importance. Reporting on audit engagements should be driven by the information needs of users of audited financial statements.”
2. AGMs and impact of COVID-19, guidance issued March 18, 2020, as to the arrangements and conduct of Annual General Meetings (AGM).
3. FRC guidance for companies and auditors during COVID-19 crisis – link - https://www.frc.org.uk/about-the-frc/covid-19.

1. Coronavirus – updates – link - https://www.icaew.com/insights/coronavirus.

1. AICPA Coronavirus (COVID-19) Resource Center – link - https://www.aicpa.org/news/aicpa-coronavirus-resource-center.html
2. Center for Plain English Accounting - Consequences of COVID-19 - Financial Reporting Considerations,Special Report published March 18, 2020, “provides succinct reminders to practitioners about some financial reporting matters that may need to be considered in light of the pandemic.”

1. Announcement, April 8, 2020, FASB to consider postponing effective dates for certain revenue and lease accounting standards for one year. See above article for details. Exposure draft to come this month.

1. Announcement, March 26, 2020, to consider postponing effective dates for No. Statement 84, Fiduciary Activities, and Statement No. 87, Leases. Exposure Draft to come this month.

1. In Light of COVID-19, PCAOB Provides Audit Firms with Opportunity for Relief from Inspections, Statement issued March 23, 2020, “up to 45-day relief period from inspections, with the exception of providing us access to audit documentation for certain engagements.” PCAOB expects to resume inspections on May 11, 2020.

1. SEC Coronavirus (COVID-19) Response – link - https://www.sec.gov/sec-coronavirus-covid-19-response

1. Discussion Paper - Business Combinations—Disclosures, Goodwill and Impairment published March 19, 2020. The goal is to improve the disclosure about acquisitions and the accounting for goodwill. The Board’s preliminary view is to help investors better understand an acquisition and its subsequent performance by requiring disclosure of management’s objectives for the acquisition in the year of acquisition, and how the acquisition has performed against those objectives in subsequent periods. To improve goodwill accounting, the Board would simplify impairment testing by providing relief from the quantitative annual impairment test and simplify how value in use is estimated. The comment period ends on September 15, 2020.

1. Is Cash Still King? Maximising the Benefits of Accrual Information in the Public Sector, report issued February 26, 2020, jointly with ACCA “not only confirms that a complete public sector transition to accrual accounting will serve the public interest, but also contains 30 specific recommendations to improve accrual implementation.”

1. Is Cash Still King? Maximising the Benefits of Accrual Information in the Public Sector, report published February 26, 2020, jointly with IFAC “not only confirms that a complete public sector transition to accrual accounting will serve the public interest, but also contains 30 specific recommendations to improve accrual implementation.”
2. Global Economic Themes, report published February 19, 2020, in conjunction with the Industry Management Association, “examines three of the longer-term structural issues that are affecting the global economy as well as the global economic impact of the US-China trade tensions. The three issues are: the Euro – fiscal integration needed; China - becoming rich before it becomes old?; the USA – public debt challenges.

1. An overview of integrated reporting for Chartered Secretaries and Chartered Governance Professionals, guidance published March 12, 2020, “shares insights into the fundamental concepts of the International <IR> Framework, the structures that need to be in place to adopt it and the specific role Chartered Secretary and Chartered Governance Professionals can play in its implementation.”

1. How Can Trade Rules Support Environmental Action?, report published March 26, 2020. “As governments and businesses grapple with the effects of COVID-19, other global challenges remain. Once the immediate crisis abates, countries must intensify environmental action to tackle climate change, pollution, and biodiversity loss, even while restarting their economies. Trade policy has a vital role to play. This briefing paper by the Global Future Council on International Trade and Investment highlights the links between trade and the environment, summarizes efforts to date and outlines five ways in which trade rules could support environmental action.”
2. Toward Common Metrics and Consistent Reporting of Sustainable Value Creation, White Paper published January 22, 2019, “proposes a common, core set of metrics and recommended disclosures that International Business Council members could use to align their mainstream reporting and, in so doing, reduce fragmentation and encourage faster progress towards a systemic solution, perhaps to include a generally accepted international accounting standard.”

1. Auditor Reporting Bulletins, issued March 30, 2020, provide guidance for auditor reports on revised accounts, Companies Act reports, and include illustrative statutory auditors reports on United Kingdom private sector financial statements.

1. Auditing Standards Board – Statement on Auditing Standards 139 - Amendments to AU-C Sections 800, 805, and 810 to Incorporate Auditor Reporting Changes From SAS No. 134, issued March 20, 2020, “aligns these three AU-C sections (the AUC 800 series) with the relevant auditor reporting standards in SAS No. 134, thereby updating the form and content of auditors’ reports addressed in the AU-C 800 series to be more consistent with the standards of the International Auditing and Assurance Standards Board and recent updates to PCAOB standards.” Effective for periods ending on or after December 15, 2020.

1. Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, ASU No. 2020-04, issued March 9, 2020, to “provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.” Effective as of March 12, 2020 through December 31, 2022.
2. Codification Improvements to Financial Instruments - An Amendment of the FASB Accounting Standards Codification, ASU No. 2020-03, issued March 9, 2020, “makes narrow-scope improvements to various aspects of the financial instruments guidance, including the current expected credit losses (CECL) standard issued in 2016. Effective at various dates.

1. Exposure Draft - Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements: Notes to Financial Statements, issued February 21, 2020. “The proposals set forth in the Exposure Draft would replace the existing criteria for disclosing information in notes to financial statements. The proposals elaborate on the types of information that should be disclosed in notes and the types of information that are not appropriate for note disclosures.” The comment period ends April 17, 2020.
2. Exposure Draft - Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, issued March 9, 2020, “is designed to mitigate financial reporting costs associated with certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and other employee benefit plans.” The comment period ends April 10, 2020.

1. Amendments to the “accelerated filer” and “large accelerated filer” definitions in Exchange Act Rule 12b-2., issued March 12, 2020. “The amendments would allow smaller issuers that have been public for more than five years, but have not yet reached $100 million in revenues, to continue to benefit from the JOBS Act exemption as they build their businesses, while maintaining important investor protections… As a result of these amendments, and unlike larger issuers, these smaller companies will no longer be required to obtain a separate attestation of their ICFR from an outside auditor.”