Assurance on half-year reports in times of crisis
The COVID-19 pandemic crisis and its economic impacts mean that investors need high-quality financial information more than ever.
Half-year reports are coming up, and this year they are published in the light of a global pandemic which caught most of the world by surprise.
COVID-19 has greatly impacted the world and disrupted business operations. Thus, the material uncertainty and effects from the pandemic are expected to be illustrated in the half-year reports across sectors and industries.
In these times of uncertainty, investors need high-quality financial information more than ever.
Be ready with a plan
According to Martin Faarborg, Partner and Corporate Governance Leader in Deloitte, Audit Committees are expected to establish a plan to accommodate the need of investors for high quality financial information:
Companies are facing an important task to deliver high-quality financial information addressing investors needs and comfort. We recommend that companies consider existing accounting requirements when disclosing the financial effects of COVID-19.
There are no formal requirements for external assurance on the half-year reports from the independent auditors. However, according to Martin Faarborg, it should be considered by the Audit Committee and the CFO whether it would be relevant and add value.
Provide the relevant information
In the coming weeks, listed companies will be issuing earnings releases and conducting investor calls being required to provide information on their current and expected financial condition.
Company disclosures, in particular, should respond to investor interest in the current status of the company, how the company’s COVID-19 response is progressing, and how its operations and financial condition may change as a result of its efforts to fight COVID-19. Historical information may be relatively less relevant, says Martin Faarborg.
Producing comprehensive financial and operational reports may present challenges for companies in the current circumstances, particularly reports that include forward-looking information.
Different assurance levels exist
- Specified audit procedures
- Assistance and advisory (including a ‘IAS 34 compliance check’)