Potential effects of the Coronavirus outbreak on financial reporting
24 March 2020
The Coronavirus Outbreak poses a serious public health threat. In response, the Chinese government has taken a number of actions, including the isolation of certain cities in areas most significantly affected, an extension of public holidays, and restrictions on the movement of people. A number of businesses have reduced or suspended operations and have instructed employees to stay at home.
This brings potentially significant financial reporting implications, in particular considerations concerning impairment and going concern. This IFRB focusses on implications for periods ended 31 December 2019, but will be relevant for other reporting dates. There will also be implications for interim reports issued in 2020.
Read more about the potential effects COVID-19 has on 31 December 2019 year end financial reporting.
For reporting periods beginning on or after 31 January 2020, the effects of the coronavirus would need to be incorporated into the preparation of financial statements. The effects of the coronavirus may be very wide spread, and relate to many industries; they are not limited only to entities operating directly in the travel and tourism industry (e.g. airlines, tour operators, etc.). Coronavirus may affect entities in nearly every sector, due to the following impacts:
- Reduced consumer demand for goods and services due to lost income and/or restrictions on consumers’ ability to move freely;
- Lack of investment in capital improvements and construction reducing demand for many goods and services;
- Reduction in market prices for commodities and financial assets, including equity and debt instruments; and
- Disruption of global supplies chains due to restrictions placed on the movement of people and goods.
Read more about the potential effects COVID-19 has on 2020 reporting peroids and onward.
Information included in this insight was last updated on 24.03.2020
Please contact your local adviser for specific advice.