COVID-19 Impact on AccountingPosted: August 3, 2020
It seems there is no place exempt from the impact of COVID-19, including accounting. The impacts have been numerous and all over the board. Everyone seems to know about the extension of the tax filing deadline to July 15, but that is not really an impact on accounting itself. Here is just a small list of impacts that need to be considered:
- Asset impairments (from operational disruptions)
- Accounting estimates, including
- Variable consideration from contacts with customers (i.e., revenue)
- Bad debt reserves (on top of the change to CECL)
- Speaking of CECL, the new credit loss standard was delayed for some entities
- Oh, and the revenue and lease standards were further delayed for companies that had not yet adopted those changes
- Changes impacting hedging from transaction that may not now take place or will be at substantially different volumes
- Accounting for various parts of the CARES Act – are the payments government grants, revenue, loans or tax changes (or maybe all four)
- Lease modifications due to the pandemic that can be elected to not apply lease modification accounting (in some cases)
And like the change in the tax deadline, the SEC provided some relief on quarterly filing deadlines, but also made it clear they expect to see a lot of disclosure around the impacts of COVID-19 on the business. Finally, let’s don’t forget the potential impact to internal controls from everyone working at home – while not a change in standards, it certainly impacts the accounting process.
I’m sure everyone is trying to figure out how to handle keeping things afloat in this new abnormal, but we can’t lose sight of all the changes, many of which will prove helpful in presenting financial results that make sense, while trying to still get the day-to-day accounting work done. The SEC, FASB and AICPA are issuing a lot of statements and documents, so I won’t try to replicate all of that work here. Just know that you aren’t alone and lots of people are doing their best to provide help and guidance in these truly unprecedented times.