ICAB issues COVID-19 guidelines for accountants

The Institute of Chartered Accountants of Bangladesh (ICAB) has come up with a guideline for all its members on what and how to address in preparation and audit of financial statements during the coronavirus pandemic. 

The detailed guideline, prepared in consultation with the accounting regulator Financial Reporting Council (FRC) by the technical and research committee of the ICAB, was sent to the chartered accountants in the middle of this month. 

Sabbir Ahmed, ICAB vice-president and chairman of its technical and research committee, told The Business Standard that accounting and auditing standards demand an impact forecast of factors in companies' businesses. 

It includes the assessment of significant risks, forecasts on asset valuation and recoverability, and very importantly, the question of going concern—if the company will be able to continue its business or not. 

"In the uncertain time of the pandemic, it is very important for the users of financial statements that they get the picture of risks and uncertainties right as much as possible," Sabbir said. 

The ICAB told its members, who are in diversified roles ranging from management positions to external auditing, that the uncertainty and business impacts of the not-seen-in-decades global crisis should be reflected in companies' disclosures, and auditors' observation and opinion.

For that, compliance with the followed accounting standards is a must. 

Like all others, the ICAB said the extent and ultimate economic impact of the pandemic are still unknown and it will vary among industries. 

The nature of individual entities and risk profile of the industries concerned will determine the impact of the crisis, said the primary regulator of the country's external auditors. 

The ICAB named some sectors that might be more affected during initial stages. 

Export-oriented industries, including their backward linkage, may suffer due to order cancellations, said the letter. 

The list of sufferers includes travel, tourism and hospitality industries on account of both lower local and international demand and restrictions as well. 

Lenders, due to deferral of loan repayment, slower credit growth and stress of borrowers may also suffer in business. Meanwhile, the insurance sector may suffer from lower renewal, return on investments and higher claims. 

If public and private sector projects are delayed, the construction and relevant manufacturing sectors will face difficulties. Besides, businesses that rely on inward remittance may also suffer. 

In such a context, ICAB members are guided to enquire, observe and opine whether the publisher of the financial statement is likely to survive this hard time and operate in the coming days. 

Besides, there should be a better reflection of the true nature of inventories, existing assets, receivables, orders, the possibility of successful repayment of loans and other liabilities in this unusual time. 

The ICAB also said that travel restriction during the time of pandemic has increased challenges for auditors to check essential information. It also caused difficulties for companies about timely assessment of things and preparing statements.