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Mar 16, 2020
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Auditors feel companies may have to state coronavirus impact in accounts
Financial statements for Indian and multinational companies may have to reflect the impact of the Coronavirus-related shutdown and disruptions if any on business operations, auditors have said. Practice alerts issued by audit firms to clients and to audit teams internally have so far focused on the impact on financial statements for the year ended December 31, 2019 but auditors say that the same rules will apply to firms for the full year ending March 2020 and for subsequent quarters. ET spoke to assurance and audit heads of India’s largest firms who among them audit about 70% of top 1,000 listed companies and almost 80% of biggest multinationals.
“While this will have an impact in the next 1 or 2 quarters, companies with strong balance sheets will be able to withstand this. The problem, however, is that no one knows how long this pandemic and its resultant impact on business will last. Auditors have to make judicious calls,” said Sharmila Karve, ex-audit head, PwC.
Auditors say that there are two significant issues that may crop up in case of major damage to business activities due to the Coronavirus and they include impairment resulting from financial losses, breach in bank covenants etc and the impact on the company as a going concern.
Source -
https://economictimes.indiatimes.com
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