COVID-19 Financial Reporting Considerations Coronavirus Pandemic

https://bit.ly/2WWTQGe Consequences of COVID-19 Financial Reporting Considerations By: Robert Durak, Mike Austin, and Thomas Groskopf The coronavirus pandemic (COVID-19) is above all a global human tragedy. The spread of the pandemic also is having serious economic implications. Numerous sectors of the economy are suffering damage and the long-term economic and business consequences remain unknown. Among the many consequences of COVID-19, entities may face financial reporting implications and challenges. Impacts such as business and production disruptions, supply-chain interruptions, negative impacts on customers, volatility in the equity and debt markets, reduced revenue and cash flows, and other economic consequences may occur. This Special Report provides succinct reminders to practitioners about some financial reporting matters that may need to be considered in light of the pandemic. Subsequent Events Entities may need to evaluate whether the consequences of COVID-19 represent subsequent events. FASB Accounting Standards Codification (FASB ASC) 855, Subsequent Events, defines subsequent events as events or transactions that occur after the balance sheet date but before financial statements are issued or are available to be issued1 . There are two types of subsequent events: • The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements (that is, recognized subsequent events) • The second type consists of events that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date (that is, nonrecognized subsequent events) Recognized and nonrecognized subsequent events, as defined in FASB ASC 855, correspond to the two types of subsequent events described in U.S. generally accepted auditing standards (U.S. GAAS) found in AU-C 560, Subsequent Events and Subsequently