Effects of the coronavirus on financial reporting
- March 16, 2020
- Posted by: Hood & Strong
- Category: Uncategorized
U.S.-listed companies (including companies based in the U.S., companies based in China and companies based outside of the U.S. but not based in China) may have significant operations in China and other jurisdictions, such as Japan and Singapore, that may be affected by the coronavirus. In addition, companies that do not themselves have operations in China or other potentially affected jurisdictions may depend on companies that have operations in those jurisdictions, including, for example, as suppliers, distributors and (or) customers. On February 19, 2020, the SEC and the Public Company Accounting Oversight Board (PCAOB) issued a joint statement regarding certain matters, including financial reporting considerations related to the coronavirus.
The SEC reminded issuers of its general policy to grant appropriate relief from filing deadlines in situations where, in light of circumstances beyond the control of the issuer, filings cannot be completed on time with appropriate review and attention. Issuers and their advisors are encouraged to contact SEC staff regarding any need for relief or guidance. The staff will determine whether to provide additional guidance and relief as appropriate for affected parties.
The SEC also emphasized the need for issuers to consider financial statement disclosure related to the potential effects of the coronavirus, including disclosure of subsequent events in accordance with the guidance in Financial Accounting Standards Board Accounting Standards Codification Topic 855, Subsequent Events. If issuers have questions regarding the reporting of matters related to the potential effects of the coronavirus, they are encouraged to contact SEC staff.
In addition, the PCAOB discussed the impact that potential exposure of companies to the effects of the coronavirus could have on audit quality, including, for example, audit firm access to information and company personnel. Issuers are encouraged to work with their audit committees and auditors to ensure their financial reporting, auditing and review processes are as robust as practicable in light of the circumstances in meeting the applicable requirements.
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