The Financial Reporting Council of Nigeria (FRC) has issued the second guidance on the impact of COVID-19 on financial reporting in two weeks.
This was disclosed in a statement issued by the council and seen by Nairametrics.
While the first guidance targets auditors of financial statements in Nigeria, the latest guidance targets preparers of financial statements during COVID-19 pandemic.
FRC is saddled with the responsibilities of ensuring accuracy and reliability of financial reports and corporate disclosures; maintaining a register of professional accountants and other professionals engaged in the financial reporting process. It also advises the Federal Government on matters relating to accounting and financial reporting standards in Nigeria.
Why it matters: The guide is for Directors of reporting entities and those charged with governance to assess the risk of COVID-19 at an early stage of the financial reporting and audit process.
The document draws preparers attention to the possible impacts of COVID-19 on their businesses with the consequent financial reporting implications, which they are expected to give particular attention to, all within the framework of existing body of standards i.e. International Financial Reporting Standards (IFRS).
It stated, “Some of the specific issues addressed in the guidance include events after the reporting period, going concern, effects on interim financial reporting, changes in expected credit losses for loans and other financial assets, net realizable of inventories, group reporting, effects of government and regulatory relief programmes on entities and their customers and transparency and disclosures.
“The importance of providing all relevant disclosures related to actual and potential impacts of COVID-19 by preparers of financial statements in order to comply with the requirements of IFRS.”
Details: The Council also reminds preparers that they are expected to disclose the principal risks and uncertainties that they face because of COVID-19 outbreak in their interim reports.
“Regulated entities such as banks and insurance companies are encouraged to consider any guidance that may have been issued by their industry regulators as long as they do not contradict the provisions of IFRS.
“The guidance does not in any way alter, remove or add to the requirements of financial reporting standards and that professionals are therefore still expected to exercise necessary judgements in the recognition, measurement, presentation and disclosure of information in their general-purpose financial statements in the context of the current pandemic,” it added.
