Disclosures of Corona impacting the Business Operations and the Financial Statements

During the current crisis, one of the most critical issue that needs to be addressed is: how long will the company be able to continue its current operations? The same issue interpreted in accounting terminology is— will the company continue to be a going concern at the end of the year? There are multiple issues that companies must address now, as it probably is too late at the end of the year.

In the pre-Covid19 pandemic era, the answer is given based on the facts and figures of the operating statement and/or the balance sheet. However, in the current prolonged situation, historical financials can no longer be relied upon to predict future trends such as cash flows, operating results etc.

Almost all companies in some way or another are having to face the Covid-19 factor and impact. The first consequence or possibility is of some sort of higher defaults from customers or changing valuations that can be challenging.

Therefore an estimate of any significant reduction in the fair value of investments and other assets must be identified before the year-end.

Management must address the biggest issue relates to the going concern concept that almost all global Companies Act in the various countries that require directors to state that the annual accounts were prepared on a going concern basis.

Going concern, the key consideration for auditors amid Covid-19

Then the external auditors are responsible and required to evaluate management’s assessment, based on the guidance from the local oversight authorities for the Chartered Accountants. Many of these oversight authorities have already provided a series of advisory, FAQs and guidance reports for its members that must be reviewed by the CFO and management.

Covid-19 does not necessarily need to be translated into any material uncertainty on the company’s ability to continue its operations. However, the current uncertainty and circumstances calls for a regular updating of the operating statements used in the management’s assessment of a going concern.

The management should therefore look into the pandemic influence, market conditions and the various evaluations and impairments in the markets & industry in which it operates. Start with the identification of all stakeholders and customers’ ability to continue to be in business & pay bills. The support provided by many local governments, will effect the business if the social distancing and lockdown laws continue.

Neglected (IT) infrastructure, discipline, accountability, transparency issues

Another issue to be addressed by management and the board of directors is: will the current revolution in dealing with data and the data and systems assurance in the spotlight.

• Are we currently experiencing a wakeup call for the next vicious cyber-attack that can as well paralyse the global corporate and public infrastructure?

It is a good time to bring clarity and address the current uncontrolled spreading of the cyber virus due to neglected (IT) infrastructure, procedural bureaucracy (management) discipline, accountability, transparency issues and for a responsive, efficient and well-functioning compliance. We will be addressing Data- Privacy, Protection, IT Governance, Risk, Compliance and IT Security issues, in general, and IT security and Cybersecurity safeguards, in particular, to avoid that malicious criminals gain control of computer systems.

• Focus on the quality of the data collection, processing and reporting
• Improving the structure and accuracy of the data available
• Centralising controls in security operations centers
• Working together with all stakeholders for truly assessing IT and cyber risks.

The coronavirus is the “Black Swan of 2020”

Throughout history, humans have spread infectious diseases across the world. The coronavirus is the “Black Swan of 2020”, as a rare, unexpected event that probably will cause a massive impact, heavily influence global activity and could fundamentally alter the current business environment.

Prudent guidance on how to survive the business and economic challenges posed by the spreading effects of the coronavirus could be as follows:

• Get ready, cut expenses, preserve cash, because money will dry up.
• Prepare to survive tough sales, and cut advertising and marketing expenses
• Be prudent with capital spending and examine your capital spending plans in this uncertain environment.

As a result of the Corona pandemic, we have postponed all planned data privacy, data protection and IT security training and certification activities and focus on our e-learning platform.