Institute of Chartered Accountants of India ( ICAI) has recently come up with an advisory on issues related to Accounting and Assurance for Financial Year 2019-20.
Not only India but the entire world is suffering from COVID-19 crises and the ruling of every nation is in the run to treat presently ill patients and curb the further spread of this deadly disease. Coronavirus has recently been identified as a global pandemic by the World Health Organisation (WHO). the government of every nation is doing whatever is in their power to eliminate the traces of the disease from their land may it be the nationwide lockdown or contributions to relief funds or aid to poor sections or more. India is one of the victims of this pandemic.
Talking about India, along with a huge loss to health, the pandemic has equivalently affected the economic section of the society. The current scenario has adversely affected the preparation of various financial statements and reporting.
Alterations in the terms of financial statements and reporting (for the year ending on 31 March 2020) shall duly be done keeping in mind the impact of COVID-19 on the country.
The amended terms thereon shall be passed to the preparers and the auditors in order to guide them with the new norms.
On this ICAI has introduced an advisory with the heading “Impact of Coronavirus on Financial Reporting and the Auditor’s Consideration” covering the crucial areas that need particular attention in terms of financial reporting for the year 2019-20.
ICAI president Atul Kumar Gupta said that the institute is dedicated to high-quality financial reporting and is reliable based on the applicable accounting framework and audit opinion laid down in standards of audits.
Accounting norms that need attention are specified under the Accounting Advisory. It includes some of the important requirements of Indian Accounting Standards (Ind AS) and Accounting Standards (AS).
The advisory is framed for:
- Organisations to whom Ind AS is applicable
- Organisations to whom AS is applicable
- Companies that abide by Accounting Standard Rules 2006.
- Non-corporates that abide by the AS issued by ICAI.
The advisory launched by ICAI thoroughly focuses on the important areas that are taken into consideration in the prevailing situation.
Annexure A is prepared for reference to such details.
- Inventory Measurement
- Impairment of Non-Financial Assets such as PPE, Goodwill and Intangibles
- Financial Instruments (Impairment Losses, Fair Value Measurement and Hedge Accounting)
- Provisions, Contingent Liabilities, and Contingent Assets
- Modiﬁcations or Termination of Contracts or Arrangements
- Going Concern Assessment
- Borrowing Costs
- Post Balance Sheet Events
- Interim Financial Reporting
- Income Taxes
- Consolidated Financial Statements
- Property, Plant, and Equipment
- Presentation of Financial Statements
Points w.r.t. Auditing Advisory is:
ICAI further recommends the auditors to carefully evaluate the circumstances in their audits and judge the risk accordingly. At the same time abide by the concepts given in the Advisory.
Contents of Auditing Advisory
The advisory highlights the points that need utter attention of ‘auditors’ in the prevailing situation. Those cover Valuation of Inventory on a date other than the date of financial statements, Audit of Consolidated Financial Statements where Components/component auditors are located in severely affected places, Subsequent Events or Events after Reporting date, Going Concerned, etc.
ICAI has also recommended that the auditors must have a public interest obligation to complete the audit in-line with the standard code of conduct under the current circumstances. Auditors must be specific to the aspects they need to report to address the challenges and uncertainties arising out of the impact of COVID-19.
President, ICAI further added “I am sure the advisory will meet the objective of its release and help both preparers and auditors in their respective areas. In these challenging times, this advisory will surely help Chartered Accountants in discharging professional responsibilities more effectively.”