After the COVID-19 wreaked havoc in our life followed by the lockdown, the business activities have got affected. In this juncture, the charted accountantsâ€™ apex body ICAI has issued a detailed advisory on financial reporting and audit of financial statements for the current financial year.
As per information, the 49-page advisory on â€˜Impact of Coronavirus on Financial Reporting and the Auditors Considerationâ€™ highlights various areas which 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 about 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 recognise 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 emphasised that irrespective of the challenges and uncertainties, there should not be any dilution or non-compliance with the auditing standards.