Over the past few months, the entire world has dealt with the significant impact of the COVID-19 pandemic. While potentially of a secondary concern, the aftermath of COVID-19 has also had a significant impact on the accounting and financial reporting functions of virtually all entities, for-profit and not-for-profit alike. Further, these continuing impacts of the coronavirus pandemic will impact how we provide accounting services to our clients for the foreseeable future, creating challenges in how we fulfill our professional responsibilities when performing audits and other services in the new virtual environment.
Several months ago, these issues were abstract but now, with the June 30 reporting period rapidly approaching, the accounting profession must develop real, concrete responses to these challenges now. Clients will be facing accounting issues that they may have never contemplated in normal times, such as asset impairments, debt restructuring, and consideration of their ability to continue as a going concern. Further, they will need to understand the accounting implications of actions that they take to recover their businesses, especially those related to their interactions with customers.
Similarly, auditors will need to develop new ways to audit in this virtual environment, given the impact on business processes, internal controls, and a general lack of access to client personnel over the audit process. All the while, we must continue to adhere to our professional standards.
To help both financial statement preparers and practitioners deal with these unique challenges, Surgent has developed three courses that address these issues that all accountants will soon be facing.
In Financial Reporting Implications of the COVID-19 Pandemic (FRC4), we’ll review the many accounting implications of COVID-19, with a focus on impairment accounting, debt and lease concessions, subsequent event accounting, and going concern disclosures. Plus, we’ll review recently issued guidance on accounting for such items as Paycheck Protection Program loans, loan concessions, and effective dates of new accounting pronouncements. While not all entities will be directly impacted by all of these accounting considerations, virtually all will at least need to assess a potential impact. While not necessarily new, many preparers and practitioners may not be familiar with all of the nuances of these complex accounting standards.
In addition to specific accounting considerations, the impact of COVID-19 is requiring many entities to consider their ability to continue as a going concern. In Going Concern Accounting and Reporting Considerations in the COVID-19 Environment (AGC2), we’ll review the entity’s financial reporting responsibilities related to assessing whether substantial doubt exists concerning its ability to continue as a going concern, as well as its assessment of whether its going concern mitigation plans will alleviate this doubt. Next, we’ll review the accountant’s responsibilities related to going concern risk in both audits and engagements covered by the SSARS.
Lastly, the revised work environments in which both clients and accountants are operating have created challenges in both maintaining effective business processes and related internal controls as well as in performing required engagement activities such as performing an effective risk assessment. In Performing an Effective Audit Risk Assessment in the COVID-19 Environment (RAC4), we’ll discuss the audit implications of these revised business processes on the audit risk assessment process, with a focus on those items on which auditors will need to address to assure that they meet professional standards on all engagements. Specifically, we’ll focus on the audit risk assessment process, assessing risk of material misstatement in a varying control environment, and how to perform effective and efficient audits and other procedures in a virtual environment.
COVID-19 has challenged us in many ways. While its accounting and financial reporting implications need to be kept in their proper context, we as accountants have a critical role to play in assessing the financial impact of the coronavirus pandemic. An integral part of that role is to provide critically needed financial reporting that meets our professional responsibilities and which also provides accurate, timely, and relevant information that provides feedback on the impact of COVID-19. To do this, we must be well-versed in our accounting and professional services guidance in order to provide high-quality services to our clients and to the wider group of stakeholders. These three courses will help you to be able to meet this challenge.
Rich Daisley, CPA, is Vice President of Accounting and Financial Reporting Curriculum for Surgent CPE. With over 26 years of experience in the accounting and auditing field, Mr. Daisley has worked in both the client service setting, mainly for PwC’s Capital Markets and Accounting Advisory Services Group and for PECO Energy’s Merger and Acquisition Group, and in the internal capacity setting as a course developer and facilitator creating leading training courses for PwC and Surgent. Rich lives in suburban Philadelphia.