The coronavirus (SARS-CoV-19) pandemic continues to spread rapidly in many countries, including Turkey. The World Health Organization (WHO) and local authorities are in consultation on the effects of coronavirus on humans. 

This crisis has caused significant economic effects on companies due to restrictions on production, trade and consumption or travel barriers, and these negative effects continue. These economic effects have an impact on the accounting, reporting and supervision of companies or various institutions. This publication will focus on some possible consequences. However, the impact on companies will be different, and companies and auditors need to assess how this crisis will have an impact on businesses and regularly examine this situation.


The effects of coronavirus can be examined in the following considerations:


O accounting and reporting for companies as of 31 December 2019

                            O accounting and reporting for companies at the end of 2020

O audit of financial statements for periods as of 31 December 2019 and beyond

O application issues for audit of financial statements


Effects on accounting and reporting for companies as of December 31, 2019

It must be fully compliant with reporting standards such as International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) and relevant local Generally Accepted Accounting Principles (GAAP). In addition, companies need to make assessments by going beyond responding to real accounting and reporting problems caused by coronavirus through a clever and practical way.

           Reflecting the situations arising at the balance sheet date

On 31 December 2019, China warned the World Health Organization (who) that unusual pneumonia-like cases had occurred in the city of Wuhan. Accurate information about the virus, now identified as coronavirus, was only clarified in early 2020.

          Continuity Of Business

Companies adversely affected by coronavirus, such as small businesses or those operating in the areas of travel, entertainment, accommodation and aviation, need to assess issues related to the continuity of business.

 They should also consider conducting some possible endurance analysis to determine whether there is significant uncertainty about the business's ability to continue to exist. This can result in an additional explanation (footnote), especially if there is significant ambiguity. In some cases, it may be necessary to assess whether it is appropriate to prepare accounts on a continuity basis. For this, the company should evaluate all the information it has about the impact on its future business activities. According to this timeline, at least the first twelve months after the balance sheet date or after the date of signing the financial statements should be evaluated.But a longer timeline may be more accurate.  Assessment of business continuity should be continuously updated at the date of approval of the financial statements.

  Post-balance sheet considerations that do not require correction

General obligation is that the balance sheet reflects the financial position of the entity at the end of the reporting period. January December 31, 2019 year-end for companies in Europe, therefore, since the outbreak occurred in the middle of January 2020, the emergence of coronavirus is an event that does not require correction for the year 2019.

An estimate of the nature and financial impact of a significant event that does not require correction should be explained by a footnote. Therefore, companies need to assess the impact of coronavirus on their businesses. This effect will vary depending on the specific situations in the commercial areas in which they operate. This includes revealing the possible effects of this emergency during the next reporting period of the disclosures to be included in the financial statements.

A more complete description to be included in the management report

Companies should also assess whether to provide information on the possible effects of coronavirus when specifying key risks and uncertainties in the management report. In principle, if other possible developments lead to negative deviations in the company's forecasts, they should also report it.

Post-balance sheet review period

” Considerations after the end of the reporting period " includes all considerations up to the date on which the financial statements are allowed to be published. A comprehensive post-balance sheet review should be added to the year-end reporting plan.

Impact on year-end accounting and reporting of companies in 2020

As time passes through 2020, more information will emerge on the scale and impact of coronavirus. More judgment may be required when determining conditions at the balance sheet dates after 2019 and therefore evaluating whether developments require correction or do not require correction. 

Coronavirus is a consideration that requires correction for the reporting period ending January 31, 2020. In addition to ensuring the continuity of the business of the company, such as the following estimation uncertainty and judgement will have to examine all the account fields that are connected to that accounting estimates [1] fair value measurements of the company's assets value hedge accounting other financial statement footnote that he expected a drop in credit loss reviews violations of the contract obligations, the restructuring plan requires the evaluation of the provisions of the convention and heavy.

Effects on audit of financial statements for periods as of 31 December 2019 and beyond 

Even under the pressure of changing timetables, compliance with International Auditing Standards (UDS) must remain fully in place. In addition, auditors should examine the past and consider further review to respond to the audit problems coronavirus will cause for companies and their reporting.

The effect of coronavirus on a company's risk assessment

The auditor must conduct a risk assessment and determine whether this assessment needs revision due to new significant risk threats, such as the company's liquidity. Because the current situation is highly unstable, the risk assessment will need to be constantly reviewed during the audit. Further information on the issue can be found in UDS 315 (“identifying and assessing significant inaccuracy risks”).

Obtaining Audit Evidence

Auditors should assess how adequate and appropriate audit evidence will be collected. In this context, auditors should recognize that they may need to change their audit approach and develop alternative procedures, especially in Group audit contracts with subsidiaries where access is restricted.  This will continue to be necessary for the evaluation of the notification or modification of the audit opinion. The auditor should anticipate greater use of technology in data sharing or holding virtual meetings.  The UDS 500 independent audit evidence provides more detailed information about this.

Recommendations for the auditor to assess the continuity of the business

Given the uncertainty about the global economy and the growing state of urgency for most companies, this will undoubtedly be the key focus of most current and future audits, and UDS 570 will maintain business continuity compliance. For example, the following points regarding the assessment of the continuity of management might include: identified risk factors and possible different results considering the different scenarios that examine the compatibility of the estimates of projected future contracts that you update accordingly the steps to be taken in the change of plans of management for the statements (footnotes) expanding.

Impact on the company's future expectations of the auditor's report

Management should consider the challenges it may face when preparing for future projects and identifying high levels of uncertainty and instability. In fact, such estimates can change significantly over a short period of time.  In this case, it is extremely important for the auditor to use professional judgment and professional skepticism. Care should be taken to ensure that this estimate reflects when the audit report will be signed. 

Consideration of the adequacy of the administration's statements on Coronavirus effects

The auditor should ensure that management's disclosures adequately describe the company's expectations and how users of financial statements may be affected by this.  All this is to describe an environment of high levels of uncertainty. Auditors should also consider responsibilities related to financial statements and other information provided by management.

Recommendations for the implementation of financial statements in the audit ​

Auditors are advised to discuss and be proactive with the company's customers about the effects of coronavirus on the company, including contingency plans, operations, areas of activity, reporting times and the relevant audit schedule. There is a risk of delay as the company may experience a setback in preparing this information.

Logistical problems in preparing accounts and conducting audits


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