IFRS in Focus: COVID-19 Accounting considerations

Global response to the coronavirus disease 2019 (COVID-19) outbreak continue to rapidly evolve. COVID-19 has already had a significant impact on the global financial markets and it may have accounting implications on companies.

Deloitte has issued the attached publication to highlight some of the key issues to be considered by entities in preparing their financial statements applying IFRS for periods ending on or after 31 December 2019.

As COVID-19 continues to spread globally, it may be appropriate for entities to consider the impact of the outbreak on accounting conclusions and disclosures related to, but not limited to, the following:

• Impairment of non-financial assets (including goodwill).
• Valuation of inventories.
• Allowance for expected credit losses.
• Fair value measurements.
• Onerous contracts provisions.
• Restructuring plans.
• Breach of loan covenants (including impact on the classification of liabilities as current vs non-current).
• Going concern.
• Liquidity risk management.
• Events after the end of the reporting period.
• Insurance recoveries related to business interruptions.
• Employment termination benefits.
• Share-based compensation performance conditions and modifications.
• Contingent consideration in contractual arrangements.
• Modifications of contractual arrangements.
• Tax considerations (in particular, recoverability of deferred tax assets).

The ultimate recognition of accounting impacts related to these issues will vary depending on each entity’s specific facts and circumstances.

Whilst we understand that your main priority at the moment is the safety and wellbeing of your people, we are available to assist you should you require help in evaluating these considerations.

Looking ahead, the impact of COVID-19 on the global economy and financial markets is expected to continue to evolve. Entities should continue to evaluate the related accounting issues and disclosure considerations discussed above as facts and circumstances change.