How to prepare a financial statement in the times of COVID?

Almost all industries have been hit by the ongoing COVID-19 pandemic. Units found themselves in a situation that required unusual solutions in the scope of the financial statements preparation, its audit, the report on operations, conducting the inventory count down, as well as in the scope of the assessment of new threats and presentation of the events of the end of the year.

What should you pay attention to when preparing the financial statements for 2020?

Business Continuity Assumpsion

Although the regulations have not changed, to meet the criteria for the business continuity assumption presented in our financial statements, a number of additional factors are to be considered due to the negative impact of the pandemic. Apart from the obvious ones such as the industry or geographical area of operation, the financial condition of customers, suppliers, fulfillment of credit conditions and financial liquidity should be considered more broadly. The conducted analysis of risks and threats concerns not only the financial but also the operational sphere. Occurring dangers include among others: disruption of the supply chain, lack of employees necessary to conduct operational activity or recovery plans. The negative scenarios should predict the further development of the pandemic and its even more severe than currently observed business consequences. A detailed description of explanations of the circumstances is also very important in the case of no threat to further activity, both on the day of preparing the report and its approval. Events after the balance sheet date that have an impact on the assessment of business continuation require adjustments both in the books and in the statement.