Accounting implications of COVID-19

In Australia, additional precautions such as travel and transport restrictions, quarantine measures, and limitations of operating activities of businesses have been enforced, with the breadth of these limitations expanding over time.

Due to the rapid evolution of the situation, it is difficult to predict the full economic impact of the pandemic. So how do you account for COVID-19 in your financial reports?

We’ve compiled a helpful guide to provide some insight on the key accounting implications that management – and auditors – will need to consider for periods ending subsequent to 31 December 2019 (including interim periods), including:

1. Subsequent events;
2. Going concern, including the basis of preparation;
3. Impairment of assets, including goodwill;
4. Revenue;
5. Allowance for expected credit losses;
6. Fair value measurement;
7. Government grants;
8. Lease Modifications;
9. Financial instrument modifications – debt instruments;
10. Financial instruments – counterparty risk;
11. Provisions;
12. Other considerations:
    a). Joint ventures and associates;
    b). Valuation of inventories;
    c). Deferred taxes;
    d). Borrowing costs;
    e). Insured events; and
    f). Hyperinflation.

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Please reach out to your local Audit Partner to discuss your specific circumstances.