Accounting and Financial Reporting considerations due to COVID and the Economic Downturn

The COVID-19 pandemic is affecting major economic and financial markets, and virtually all industries and governments are facing challenges associated with the economic conditions resulting from efforts to address it.

Companies will have to report on their operations, financial condition, and cash flows during this crisis, and those reports will have to be audited. There are numerous considerations management and auditors will need to take when preparing and auditing financial statements. There will likely be many interrelated financial reporting and auditing implications of the coronavirus (COVID-19) pandemic and its impact on economic activity.

Entities must carefully consider their unique circumstances and risk exposures when analyzing how recent events may affect their financial reporting. Financial reporting and related financial statement disclosures may need to convey all material current or potential effects of the COVID-19 pandemic. Management must also understand the risks entities face and how they are affected by them.

SEC registrants must consider whether to disclose information in areas such as MD&A or the risk factors section in addition to their disclosures in the footnotes to the financial statements.