LIBOR Transition
Will Have Far Reaching Impact

• modifications—a company would not derecognise or adjust the carrying amount of financial instruments for modifications required by interest rate benchmark reform, but would instead update the effective interest rate to reflect the change in the interest rate benchmark;
• hedge accounting—a company would not discontinue its hedge accounting solely because of replacing the interest rate benchmark if the hedge meets other hedge accounting criteria; and
• disclosures—a company would disclose information about new risks arising from the interest rate benchmark reform and how it manages the transition to alternative benchmark rates.”

1. Exposure Draft Covid-19-Related Rent Concessions, issued April 24, 2020. “The proposed amendment would exempt lessees from having to consider whether particular covid-19-related rent concessions are lease modifications, allowing them to account for these changes as if they were not lease modifications. The amendment would apply to covid-19-related rent concessions that reduce lease payments due in 2020. The comment period ended May 8, 2020.
2. IFRS 16 and COVID-19 — Accounting for covid-19-related rent concessions applying IFRS 16 Leases,guidance published April 10, 2020. The guidance “does not change, remove nor add to, the requirements in IFRS Standards. It is intended to support the consistent and robust application of IFRS 16.” Areas addressed include assessing whether a change in payments is a lease modification, changes in payments that are not leases modifications, partial lease liability extinguishment, impairment of assets, and disclosure.

1. COVID-19 Resources from IFAC's Network – link - https://www.ifac.org/knowledge-gateway/series/covid-19-resources-ifacs-network
2. Going Concern in the Current Evolving Environment – Audit Considerations for the Impact of COVID-19, guidance issued April 29, 2020, “to highlight key areas of focus in the current environment when undertaking procedures relating to, and concluding on, the appropriateness of management’s use of the going concern basis of accounting in accordance with the International Standards on Auditing (ISA).”
3. 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
2. Covid-19 Global Survey: Inside business- impacts and responses, published April 26, 2020, survey of over 10,000 members and stakeholders worldwide, “shows the severity of the pandemic’s effects, with continuity planning falling short across all sectors,” and “reveals the outbreak is particularly challenging for smaller organisations compared to their larger counterparts, with all sectors reporting distinct concerns about cash flow and growth.” Also, “the pandemic has specific implications for auditing firms, with the nature of the audit process needing engagement and direct interaction with the audited entity. Although digital advances continue to influence how audits are conducted and how evidence is gathered, as well as aspects of the reporting process, for many firms the crisis is creating a systemic shock to normal client engagement activities.”

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

1. Redesigning Trust: Blockchain Deployment Toolkit, released April 28, 2020, “enables leaders to maximize the benefits and minimize the risks of the technology. Resilience in supply chains depends on trust, transparency and integrity, which can be improved through the responsible deployment of blockchain technologies that offer a “shared truth”.”
2. Workforce Principles for the COVID-19 Pandemic: Stakeholder Capitalism in a Time of Crisis, White Paper published April 2, 2020. “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.”
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. Modifications of Independent Auditor’s Opinions and Reports, guidance issued April 21, 2020, addressing that the “need for a modified opinion may arise because certain audit procedures cannot be performed (for example physical inventory testing because of travel restrictions), and no other procedures can be undertaken to produce the required volume or quality of reliable audit evidence. Alternatively, management’s key judgements in areas such as asset and liability valuations, or the assumptions and cashflow estimates underpinning the use of the going concern basis of accounting, may be difficult to support in the light of wider economic and political uncertainty, or not agreed by the auditor.”
2. 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. Auditing Standards Board – Statement on Auditing Standards 141 - Amendment to the Effective Dates of SAS Nos. 134–140, issued March 1, 2020, defers for one year the effective dates of these SAS’s, which will now be effective for periods ending on or after December 15, 2021, with earlier adoption permitted. SAP 141 is effective immediately.
2. AICPA Coronavirus (COVID-19) Resource Center – link - https://www.aicpa.org/news/aicpa-coronavirus-resource-center.html

1. Staff Q & A Document, issued April 28, 2020, addressing effects of the COVID-19 pandemic on cash flow hedge accounting.
2. Exposure Draft - Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842) - Effective Dates for Certain Entities, issued April 21, 2020, “would grant a one-year effective date delay for certain stakeholders applying leases and revenue recognition guidance… The leases effective date deferral would be limited to private companies, private not-for-profit organizations, and public not-for-profit organizations that have not yet issued their financial statements. It would provide near-term relief for certain entities for whom the leases standard is currently effective who have rapidly approaching year-end dates and for entities for whom the leases effective date is imminent… The proposed effective date deferral for revenue recognition would be limited to private company franchisors.”
3. Staff Q & A Document, issued April 10, 2020, addressing accounting application questions regarding lease concessions related to the COVID-19 pandemic.

1. Exposure Draft - Postponement of the Effective Dates of Certain Authoritative Guidance, issued April 15, 2020, proposes “to postpone the effective dates of provisions in almost all Statements and Implementation Guides due to be implemented by state and local governments for fiscal years 2019 and later,” for one year. The comment period ended April 30, 2020.
2. GASB Response to COVID-19 – link -  https://www.gasb.org/COVID19

1. COVID-19: Reminders for Audits Nearing Completion, issued April 2, 2020, “to provide important reminders to auditors of issuers and broker-dealers for audits nearing completion.”
2. PCAOB Response to COVID-19 – link - https://pcaobus.org/Pages/response-to-COVID-19.aspx

1. Temporary Amendments to Regulation Crowdfunding, issued May 4, 2020, “providing temporary, conditional relief for established smaller companies affected by COVID-19 that may look to meet their urgent funding needs through a Regulation Crowdfunding offering…will expedite the offering process for eligible companies by providing relief from certain rules with respect to the timing of a company's offering and the financial statements required.  To take advantage of the temporary rules, a company must meet enhanced eligibility requirements and provide clear, prominent disclosure to investors about its reliance on the relief. The relief will apply to offerings launched between the effective date of the temporary rules and Aug. 31, 2020.” Instead of CPA reviewed financial statements, issuer financial statements plus certain Federal income tax information certified by the principal executive officer can be submitted. 
2. SEC Coronavirus (COVID-19) Response – link - https://www.sec.gov/sec-coronavirus-covid-19-response

1. Exposure Draft - Interest Rate Benchmark Reform—Phase 2 - Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, issued on April 9, 2020. See article in this issue for details. The comment period ends on May 25, 2020.

1. Practice Transformation Action Plan - A Roadmap to the Future, issued May 1, 2020, “highlights key areas and initiatives for small- and medium-sized practices (SMPs) as trusted advisers to small- and medium-sized entities (SMEs).
2. International Auditing and Assurance Standards Board (IAASB) - Exposure Draft -  International Standard on Auditing (ISA) 600 (Revised), Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors), issued April 27, 2020, “proposes more robust requirements and enhanced guidance” on a wide variety of areas. The comment period ends October 2, 2020.
3. International Audit and Assurance Standards Board (IAASB) - Conforming Amendments to the IAASB International Standards as a Result of the Revised IESBA Code, issued April 8, 2020, are intended to ensure that the IAASB International Standards can continue to be applied together with the IESBA Code. Effective July 15, 2020.
4. International Audit and Assurance Standards Board (IAASB) -  International Standard on Related Services (ISRS) 4400 (Revised), published April 3, 2020, revises the agreed-upon procedures engagement standard for clarification, and to address needs of stakeholders, transparency in reporting, and consistency of performance. Effective in 2022.

1. Auditing Standards Board – Statement on Auditing Standards No. 140, Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137, issued May 1, 2020, regarding enhanced audit report disclosures and other matters. Effective in accordance with SAS 141 described above.

1. No New Developments

1. Implementation Guide 2020-1, Implementation Guidance Update—2020, issued April 23, 2020, provides guidance on a variety of topics.
2. GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, issued April 20, 2020, provides “guidance to improve accounting and financial reporting for public-private and public-public partnership arrangements (commonly referred to as P3s) and availability payment arrangements (APAs).” Effective for years beginning after June 15, 2022, with early adoption encouraged.
3. GASB Statement No. 93, Replacement of Interbank Offered Rates, issued April 2, 2020, “to assist state and local governments in the transition away from existing interbank offered rates (IBORs) to other reference rates.” Effective for reporting periods beginning after June 15, 2020, except for removal of LIBOR which is effective for reporting periods ending after December 31, 2021.