Director, preparers and auditors of financial reports facing their “toughest reporting season” have now been given additional guidance material to lean on as professional bodies team up to provide COVID-19 assistance.
Professional bodies team up to guide directors through ‘toughest reporting season’
The Australian Institute of Company Directors (AICD), Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia have now co-authored guidance on the disclosure and reporting of COVID-19 impacts on entities.
The publication comes as the joint bodies recognise the challenges facing directors, preparers of financial statements, and auditors in light of the great uncertainty caused by COVID-19.
From key principles to assessment of going concern, the guide is structured to assist both listed and unlisted entities, including not-for-profits, charities and small to medium entities.
The new reporting guide comes as ASIC highlights focus areas for financial reporting in the COVID-19 environment for years ended 30 June 2020.
CA ANZ chief executive Ainslie van Onselen said financial statements needed to be meaningful, relevant and timely at a time when investors were increasingly looking for additional disclosure and transparency.
“This guide comes at it from the perspective of disclosure, including what entities need to talk about in their directors’ reports, operating and financial reviews, to ensure what they are saying aligns with the financials,” Ms van Onselen said.
The seven-section guide walks through each key element of an annual report, including an overview of a non-exhaustive list of major risks and issues thrown up by the pandemic.
It also sets out some key principles to be borne in mind when approaching disclosure, and discusses how COVID-19 impacts the content of the directors’ declaration regarding the preparation of the financial statements and the entity’s solvency.
“We know that entities and auditors will be dealing with difficult issues around solvency, going concern and in areas like asset impairment,” said CPA Australia chief executive Andrew Hunter.
“This guide does not seek to replace the material issued by the regulators and standard setters but instead is a roadmap to help navigate their guidance and FAQs. It will be a handy resource as they approach these issues.”
AICD chief executive and managing director Angus Armour said the guide would help directors facing their “toughest financial reporting season in decades”.
“Investors and stakeholders are seeking clarity, while directors are grappling with the uncertainty created by global recession and pandemic,” Mr Armour said.
“There has never been a more challenging period in our modern reporting environment given the level of disclosure that is now required and expected, and the consequences if you get it wrong.
“It remains a fundamental obligation that companies disclose all material information to the market where they have a reasonable basis to do so. The week-to-week volatility we are experiencing in how we work and live, never mind the markets, means directors will be required to make fine judgement calls on this information.
“This guide assists companies who are making those disclosures grapple with that difficult task.”