June 28, 2022

ICAI News: guidance note on Financial Reporting amid Coronavirus outbreak 2020

ICAI News: ICAI issues guidance note on financial reporting amid Coronavirus outbreak

Chartered accountants’ apex body ICAI has come out with a detailed advisory on financial reporting and audit of financial statements for the current financial year in the wake of businesses being impacted by coronavirus outbreak.

Business activities have been disrupted by the outbreak and the country is also under a 21-day lockdown to curb the spreading of coronavirus infections.

The 49-page advisory on ‘Impact of Coronavirus on Financial Reporting and the Auditors Consideration ‘highlights various areas that require particular attention while preparing financial statements for 2019-20 fiscal.

There is a need to advise preparers of financial statements to ensure that the potential impact of COVID-19 is suitably considered in preparing and reporting their financial statements for the year ending March 31, as per the advisory issued by Institute of Chartered Accountants of India (ICAI), which has around three lakh members.

The advisory mentions about Indian Accounting Standards (Ind-AS) and Accounting Standards (AS) areas that need to be considered, including inventory measurement, leases, impairment of non-financial assets, going concern assessment and borrowing costs.

Under the current circumstances, the ICAI said auditors must recognize that the manner in which they conducted the audits in the past may need significant modification to address the challenges and uncertainties arising out of the COVID-19 impact.

Auditors should exercise a very high degree of skepticism and be prepared to call out where the company’s narrative that the board presents is not specific.

Further, it emphasized that irrespective of the challenges and uncertainties, there should not be any dilution or non-compliance with the auditing standards.

we are only drawing the attention of preparers to some of the important requirements of Ind AS and AS, and this is not meant to be exhaustive and may differ based on specific facts, circumstances and business of respective preparers,” the advisory said.

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