COVID-19: IFRS financial reporting implications
March 27, 2020
Authored by RSM Canada LLP
Joel A. Humphrey, CPA, CA shared this article
INSIGHT ARTICLE |
COVID-19 is expected to have an impact on entities’ financial reporting under International Financial Reporting Standards (IFRS), including many accounting and disclosure-related areas. Our overview, COVID-19: IFRS financial reporting implications, addresses areas that might be impacted, including the following:
December 31, 2019 year-end financial statements
- The significant deterioration in economic conditions associated with COVID 19 is generally viewed to have begun in the first quarter of 2020. Therefore, for calendar-year-end entities that have not yet finalized their 2019 financial statements, consideration should be given to disclosure of a subsequent event, including an estimate of the impact of COVID-19 on the financial statements if known and quantifiable, or a statement that an estimate cannot be made.
- Entities experiencing financial distress prior to or as a result of COVID-19 need to assess whether there is a material uncertainty with respect to remaining a going-concern, or whether the financial statements need to be prepared on an alternative basis of accounting such as the liquidation basis.
Post-December 31, 2019 year-end financial statements and interim reporting
- Fair value estimates of financial and non-financial assets might be required to be reassessed due to a lack of access to markets or illiquidity in markets.
- COVID-19 likely will be an impairment indicator for non-financial and financial assets, and entities might be required to estimate its impact on future cash flows and discount rates, among other factors.
- Financial instruments held by entities may need to have a larger impairment loss provision recognized, with forward looking information, credit risk and other critical historical loss estimates to be reassessed.
- As a result of actions taken in response to COVID-19’s economic impacts, entities might have to consider the accounting treatment for restructuring costs, government assistance programs, long-term onerous contracts, and variable consideration on revenue contracts, among others.
Please refer to our overview below for further details regarding these and other financial reporting considerations relating to the effects of the COVID-19 virus.<
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This article was written by Craig Cross, Newton DeNiese, Corey Chan and originally appeared on 2020-03-27 RSM Canada, and is available online at https://rsmcanada.com/our-insights/ifrs-resource-center/covid-19-ifrs-financial-reporting-implications.html.
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