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IAASA outlines COVID-19 and BREXIT as two key considerations when preparing 2020 financial statements

22/09/2020

IAASA, Ireland’s accounting enforcer, has today published its annual Observations paper highlighting some significant topics that those charged with governance should consider when preparing their financial statements for 2020.

IAASA’s paper highlights some key areas that warrant close scrutiny by those preparing, approving and auditing 2020 financial statements in the upcoming reporting season including:

  • the pervasive impact of the COVID-19 pandemic on the recognition, measurement, presentation and disclosure of income, expenses, assets and liabilities in companies’ financial statements; and
  • the challenges and uncertainties facing companies from Brexit.

Against the backdrop of these two significant events, IAASA expects companies to provide entity specific and comprehensive disclosures that enable the users of their financial reports to understand:

(a)    the impact that these events have had on their financial performance, financial position, cash flows and risks;

(b)    the sources of estimation uncertainty and changes in the key assumptions underpinning assets, liabilities, income, expenses and cash flows;

(c)    the mitigating actions taken to respond to COVID-19 challenges and to Brexit; and

(d)    the expected impact on future financial performance, financial position, cash flows, and risks.

This 2020 Observations paper is addressed primarily to the preparers, approvers and auditors of financial statements. However, IAASA believes that it will also be helpful to users of financial statements and assist them in understanding the significant judgements made by companies in preparing their financial statements.  The paper seeks to highlight matters users may wish to be aware of and focus on when reviewing 2020 financial statements. 

While IAASA’s remit extends only to companies with securities admitted to trading on a regulated market (principally the Main Market of Euronext Dublin – the Irish Stock Exchange), the topics identified in the 2020 Observations paper could usefully be taken into consideration by a much wider range of companies with the aim of producing high quality financial reports more generally and increasing the transparency and usefulness of financial statements for users.

The 2020 Observations paper may be accessed here.

IAASA’s Observations papers from earlier years may be accessed here.

 

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