Regulators Issue Cautions for COVID-19 Financial Statement Adjustments

1. Covid-19-Related Rent Concessions – Amendment to IFRS 16, issued May 28, 2020, “exempts lessees from having to consider individual lease contracts to determine whether rent concessions occurring as a direct consequence of the covid-19 pandemic are lease modifications and allows lessees to account for such rent concessions as if they were not lease modification.” Effective June 1, 2020, with early adoption permitted.

1. COVID-19 Resources from IFAC's Network – link - https://www.ifac.org/knowledge-gateway/series/COVID-19-resources-ifacs-network
2. Approaches to Beneficial Ownership Transparency: The Global Framework and Views from the Accounting Profession, report published jointly by IFAC and CPA Canada on May 26, 2020. The COVID-19 pandemic and related large amounts of relief funding increase the threats of fraudulent activity. This report “explores a key facet of uncovering and fighting illegal activities: beneficial ownership transparency… which identifies who has controlling ownership of an entity.”
3. Supporting Accountants in Business & Public Sector Through Uncertain Times, report published May 7, 2020, focusing on such areas as value creation and integrated thinking, recruitment trends, evolving accountancy roles, implications on learning and development, and innovation in public sector finance and accounting.
4. International Auditing and Assurance Standards Board (IAASB) - Audit Reporting, Subsequent Events, and Going Concern Considerations Arising from Changes Due to COVID-19, staff alerts issued May 15 and April 29, 2020, “highlight 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. Cybersecurity Leadership Principles: Lessons learnt during the COVID-19 pandemic to prepare for the new normal, report published May 26, 2020, lays out “five principles developed to help global leaders reinforce the cyber resilience and cybersecurity of their organizations in a context of rampant global change and uncertainty.”
2. The COVID Action Platform – link - https://www.weforum.org/platforms/covid-action-platform -  focuses 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. COVID-19 Guidance for companies on Corporate Governance and Reporting (Including Interim Reports), updated May 12, 2020, to “highlight some key areas of focus for boards in maintaining strong corporate governance and provide high-level guidance on some of the most pervasive issues when preparing their annual report and other corporate reporting.”
2. FRC guidance for companies and auditors during COVID-19 crisis – link - https://www.frc.org.uk/about-the-frc/COVID-19.

1. Coronavirus: Going concern considerations – a guide for preparers, issued May 22, 2020, to “summarise management’s responsibilities for assessing going concern and the associated practical implications for financial reporting, in light of the coronavirus pandemic. The guide is aimed primarily at entities preparing accounts in accordance with FRS 102 but includes considerations that can be broadly applied to all entities.
2.  Coronavirus: The financial reporting implications under IFRS, guidance issued May 15, 2020, for companies to assess the impact and how to report the coronavirus.  
3. Coronavirus – updates – link - https://www.icaew.com/insights/coronavirus.

1. Professional Ethics Executive Committee – Interpretations: Information Systems Services (ET 1.295.145), State and Local Government Client Affiliates (ET 1.224.020), and Leases (ET 1.260.040), issued May 6, 2020. Effective dates have been deferred as a result of the pandemic. They are now effective generally in 2022, except for Leases, which is effective generally in 2021.
2. AICPA Coronavirus (COVID-19) Resource Center – link - https://www.aicpa.org/news/aicpa-coronavirus-resource-center.html

1. Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842), ASU No. 2020-05 - Effective Dates for Certain Entities, issued June 3, 2020, allows a one-year delay for private companies and not-for-profit organizations, for implementation of the revenue recognition and lease standards. Generally, the revenue standard will now be effective in 2021, and the lease standard in 2022.

1. GASB Statement No. 95 – Postponement of the Effective Dates of Certain Authoritative Guidance, issued May 8, 2020, delays for one year the effective dates for Statements 83, 84, 88-93, and Implementation Guides 2017-3, 2018-1, 2019-1 and 2019-2. Statement 87 and Implementation Guide 2019-3 effective dates are delayed 18 months. Effective immediately.
2. GASB Response to COVID-19 – link -  https://www.gasb.org/COVID19

1. PCAOB Response to COVID-19 – link - https://pcaobus.org/Pages/response-to-COVID-19.aspx

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

1. Amendments to IFRS 3 – Business Combinations, IAS 16 – Property, Plant and Equipment. And IAS 37 – Provisions, Contingent Liabilities and Contingent Assets, issued May 14, 2020. These are narrow-scope amendments and annual improvements “which are changes that clarify the wording or correct minor consequences, oversights or conflicts between requirements in the Standards.” The amendments are effective January 1, 2022.

1. Insights into integrated reporting 4.0: The story so far, report published May 19, 2020, “summarises the findings from reviews of the reports of 48 members of the International Integrated Reporting Council (IIRC) Business Network carried out in 2019 by ACCA in collaboration with the IIRC with the intention of creating a picture of the current state of integrated reporting <IR>.”

1. No New Developments

1. Risk Appetite – Critical to Success - Using Risk Appetite to Thrive in a Changing World, guidance published May 19, 2020. “The guidance focuses on linking risk appetite with strategies and objectives and applying appetite as part of managing an organization for success, given the amount of risk the organization is willing and needs to take.”

1. Guide to Reading the PCAOB’s New Inspection Report, published June 1, 2020. The guide recasts the 2018 inspection reports for the six largest U.S. audit firms in a new format that “streamlines the report’s content to enhance readability and utilizes new charts and graphs to make the information more digestible and accessible for users. It also includes new information not previously communicated in inspection reports to enhance transparency, which is one of the Board’s strategic goals.”
2. Audits Involving Cryptoassets, information for auditors and audit committees, published May 26, 2020, to respond to “the need for a greater focus by some auditors on the identification and assessment of the risks of material misstatement to the financial statements related to cryptoassets, as well as the planning and performing of an appropriate audit response.”

1. Amendments to Financial Disclosures About Acquired and Disposed Businesses, rules and forms amendments issued May 21, 2020, “intended to assist registrants in making more meaningful determinations of whether a subsidiary or an acquired or disposed business is significant, and improve the financial disclosure requirements applicable to acquisitions and dispositions of businesses, including real estate operations and investment companies.” These are the first comprehensive updates to the rules since their adoption over 30 years ago. Effective January 1, 2021, with early compliance permitted.