Question

Explores financial reporting and the conceptual framework which are fundamental to every business entity.

COVID-19, the global health pandemic has however affected every aspect of our existence today without exception. Accounting and financial reporting and those charged with governance now have to address the mitigation of additional financial risks as they relate to the well-being of their businesses.

Discuss Four (4) accounting and financial reporting risks and their implications that have been heightened by the current pandemic situation. At least 2 relevant accounting standards (IASs /IFRSs) must be incorporated in your discussion. (150 words) Please type in order to copy any paste

Provide reference and Standard

Answer 1

The magnitude of disruption from the Covid-19 pandemic has significantly impacted organizations of all sizes, across all industry sectors. Management and those charged with governance (TCWG) are having to make difficult decisions daily about operational, financial, and strategic matters.

The consequences on financial statement reporting and audit engagements are complex. There is an unprecedented level of uncertainty about the economy, future earnings and many other inputs that represent fundamental elements of financial reporting. There will be multiple financial reporting implications to be considered by preparers of financial statements for the purposes of reporting in the short and potentially medium term.

The responsibility for preparing and overseeing financial reporting is with management, with oversight from TCWG. They will have to exercise significant judgment in the current business environment. Of particular importance is:

• Balancing the timeliness of reporting against the reliability and integrity of reported information that appropriately incorporates managements best judgments and estimates.
• Appropriately assessing going concern and disclosures of substantial doubt/ material uncertainty when it exists.
• Providing a fair view and presentation of the performance and position of the entity, which is likely to require comprehensive disclosure of forward-looking information and cash flow impacts.
• Maintaining an environment of integrity and transparency as the basis for trustworthy and ethical decision-making across the organization
• Ensuring effective internal controls over financial reporting and emerging risks and taking advantage of extended reporting deadlines, as needed.