Things to Consider for Companies Preparing for 2020 Year-End Audits
The usual annual challenges of implementation of new accounting standards and related internal controls persist, but this year-end is unlike any other, as firms are dealing with changes to their businesses and the economy overall as a result of the COVID-19 pandemic. FASB has delayed and phased in effective dates in response to the pandemic to get higher-quality adoption and is watching the impact of the current economic environment on CECL implementation."In general, as we move ahead with our regular agenda, we may make exposure periods longer and assess the implementation dates," Jones said. For many companies, new standards on revenue, leases, and credit losses continue to be a priority for year-end accounting and reporting and beyond.
In June, FASB deferred the effective dates for certain entities for revenue and leases as a result of the pandemic. Things to consider in year-end audits In addition to these standards, there were a number of other accounting hot topics discussed at the conference that have come to the forefront this year-end because of COVID-19: Going concern. Management must evaluate whether conditions and events, considered in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued or available to be issued.
Financial assistance in response to the pandemic provided by the CARES Act and Paycheck Protection Program loans adds new complexity to year-end accounting and disclosure for certain entities. In addition to getting the new accounting and disclosures right, companies need to comply with the provisions of the Act to avoid enforcement actions. Companies must evaluate and consider the need for accounting and disclosure of both recognized and non-recognized events occurring after the balance sheet date but before the financial statements are issued or available to be issued. Each company needs to continue to evaluate relevant facts and circumstances to conclude whether there are impacts on management's estimates and judgments in all areas of its financial statements, including the topics noted above.
Credit : Maria L. Murphy for Complianceweek.com (November, 2020)
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