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IMPACTS OF COVID-19 ON FINANCIAL STATEMENTS


By Jeremy Myers, CPA | Audit Senior Manager at Atchley & Associates, LLP


First and foremost, we hope everyone is staying safe and doing well during this new normal.  Everyone’s lives and businesses (either owned or frequented) have been impacted during this pandemic. While everyone has been adjusting to life during a pandemic, many non-profits have played a vital role in holding communities together while other have relied on the community to hold them together.  We thank those who have been on the front lines dealing with this crisis and hope there is a time soon when saying “this new normal” or “these trying times” are things of the past.

In the non-profit sector there have been recent accounting standard updates (ASU) provided by the Financial Accounting Standards Board (FASB) that went into effect in which non-profits would have to address liquidity and management’s plan over their fiscal policies.  While this was an exercise that made many non-profits think and put in place different plans for maintaining reserves or tracking cash flows more closely, the past few months of COVID-19 will present a new test in managing not just liquidity, but operations overall.

The impacts of COVID-19 on businesses will be felt for the current year moving forward. When looking at the notes of all businesses you are likely to see specific subsequent event footnotes about the impact of COVID-19 on current operations. In some instances, you may find a going concern footnote as many businesses have not been allowed to operate as normal or have had to cancel all on going events for the near future.  How long these footnotes can or will exist in the footnotes of businesses across the country is not yet known, but likely for the next 1-3 reporting periods.

The AICPA has put out guidance on some example footnotes that can be used or modified to address operations during this time and moving forward:


As well as an overall COVID-19 resource pages by the AICPA and TXCPA: