INNOVATION POLICY AND INNOVATION MANAGEMENT

Covid-19 impact on the going concern assessment – the management perspective

  • 1 Faculty of Economics and Business Administration – Sofia Univers ity “St. Kliment Ohridski”, Bulgaria

Abstract

The pandemic outbreak has significantly impacted many businesses and their ability to continue operating as a going concern. Going concern is a basic accounting principle as well as one of the fundamental assumptions under the International Financial Reporting Standards. The management is responsible to determine whether the going concern assumption is relevant in the preparation of company’s financial statements. With the progress of the novel coronavirus the focus on whether an entity is a going concern should be heightened. Taking into consideration the continuing uncertainty in the Covid-19 environment, the aim of the paper is to discuss the challenges through the lens of the company’s management in the assessment of the going concern assumption. Few questions that should be considered when performing the analyses as well as some of the factors that contribute to a robust assessment are outlined. A special attention is given to disclosure requirements and their improvement in the Covid-19 context.

Keywords

References

  1. Pippo, K., COVID-19 and going concern impacts, April 2020, https://www.cpacanada.ca/en/business-and-accounting-resources/audit-and-assurance/blog/2020/april/covid-19-going-concern-impacts (accessed 16.01.2021).
  2. IOSCO, IOSCO Statement on Importance of Disclosure about COVID-19, 29 May 2020, https://www.iosco.org/library/pubdocs/pdf/IOSCOPD655.pdf (accessed 15.11.2020).
  3. IOSCO, IOSCO Statement on Going Concern Assessment and Disclosures during the COVOD-19 Pandemic, 24 March 2021, https://www.iosco.org/news/pdf/IOSCONEWS598.pdf 2021 (accessed 15.04.2021).
  4. Financial Reporting Council, COVID-19 – Going concern, risk and viability, June 2020, https://www.frc.org.uk/getattachment/ef564f3f-d37b-4469- aa30-cc36f0343708/COVID-19-Going-concern-risk-and-viabilityFinal.pdf (accessed 20.01.2021).
  5. IASB, IAS 1 Presentation of Financial Statements, https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2021/issued/part-a/ias-1-presentation-of-financial-statements.pdf (accessed 20.01.2021).
  6. IASB, Going concern – a focus on disclosure, 2021, https://cdn.ifrs.org/content/dam/ifrs/news/2021/going-concern-jan2021.pdf?la=en (accessed 04.03.2021).
  7. ICAEW, COVID-19 and going concern. Guidance for directors of SME businesses, May 2020, https://www.icaew.com/- /media/corporate/files/about-icaew/press-release-documents/icaew-icas-covid-19-going-concern-guidance-for-small-businesses.ashx (accessed 10.02.2021).
  8. IAASB, Going Concern in the Current Evolving Environment – Audit Considerations for the Impact of COVID-19, Staff Audit Practice Alert, April 2020, https://www.ifac.org/system/files/publications/files/IAASB-Staff-Alert-Going-Concern-April-2020.pdf (accessed 01.12.2020).
  9. KPMG, Analysing the going concern assumption under the COVID-19 scenario, Accounting and Audit Update, 45, 2020, pp. 1-2, aau-covid-19-financial-reporting-impact-going-concern-rbi-measures.pdf (assets.kpmg) (accessed 20.11.2020).
  10. Grant Thornton, COVID-19: Going concern considerations, 2020,(https://www.grantthornton.com.ph/contentassets/853388b 42f2d4d92a56a0a6ba5edecbf/pfrs---covid-19-going-concern-considerations.pdf (accessed 20.01.2021).
  11. IASB, IAS 10 Events after the Reporting Period, https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2021/issued/part-a/ias-10-events-after-the-reporting-period.pdf (accessed 20.01.2021).
  12. Deloitte, What is the impact of COVID-19 on your going concern assessment?, July 2020, https://www2.deloitte.com/content/dam/Deloitte/au/Documents/ audit/deloitte-au-audit-what-impact-covid19-going-concern-assessment-210720.pdf (accessed 13.12.2021).

Article full text

Download PDF