This article considers some of the issues arising from the current COVID-19 (coronavirus) pandemic in determining fair value for financial re
We have experienced COVID-19 impacts on working arrangements, our community and the economy. These impacts may result in material changes to the financial performance and position of many public sector entities. As we are getting closer to reporting season, this blog talks about financial reporting considerations in our changed environment.
Please also continue to discuss your individual circumstances with your engagement leader.
Preparers of financial statements should consider external events that have affected their operations, transactions and balances. These will include economic responses that the government provided to help with resilience and recovery strategies. Broader economic impacts may also result in changes to revenue earned, ability to recover receivables, reduced values of assets and contractual obligations.
As financial statements are prepared, understanding the underlying reasons why transactions and balances have changed will give assurance to preparers and auditors on the completeness and accuracy of the statements.
We have identified some key considerations for all public sector entities when preparing financial statements:
Entities should be assessing going concern each year, but this year it is even more important to make this assessment. Going concern means that an entity expects it will continue to operate for the 12 months after management and auditors sign the financial statements. Assessments of going concern involve:
We have published a new fact sheet on identified areas in financial reports that may be materially impacted by COVID-19. The fact sheet includes key consideration points for management relating to the following transactions and balances:
The Australian Accounting Standards Board (AASB), the Auditing and Assurance Standards Board (AUASB) and the Australian Securities and Investments Commission (ASIC) have published guidance for preparers and auditors of financial statements, including:
Each body has a COVID-19 web page that is regularly updated, including the frequently asked questions (FAQs).