Whilst the effects of Covid 19 have had a mixed impact on business, businesses need to be aware that Covid 19 is going to have a bearing on our accounts for some years to come. Areas that that companies will need to consider are:
Asset impairment – directors will need to consider any impairment and be mindful that the uncertainty of Covid 19 may detrimentally impact the economic value and benefit of its assets.
Accounting for Government grants – companies will need to continue to analyse out the grant and disclose this separately.
Going concern – directors will need to assess if Covid 19 is likely to have a impact on the companies ability to continue as a going concern.
Dividends – companies will need to consider their ability to pay interim and final dividends; and what impact this may have on its dividend policy.
Provisions – companies will need to carefully consider if provisions are needed. Specifically bad debt provisions; early termination of leases; legal fees; and redundancy costs.
Deferred tax – companies should reassess the likelihood if tax assets are realistically going to materialise.
Revenue recognition – with changes in sales policies and especially returns and refunds caused by Covid 19 then companies should consider if this may impact the manner in which companies recognise revenue.
Accounting policies – directors will need to review their accounting policies given the shift in direction that many companies have taken. Such policies will need to updated. Where a change I policy would have impacted last years comparative figures then a prior year adjustment may be needed.
Disclosures – clarity and transparency should be considered especially if the numbers have been materially skewed by Covid 19.