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Analysis

COVID-19: Accounting considerations

Considerations related to the pandemic and an economic downturn

[Updated September 2020 to add disclosure considerations related to the effects of the COVID-19 pandemic on an entity’s financial reporting.] The COVID-19 pandemic is affecting major economic and financial markets, and virtually all industries and governments are facing challenges associated with the economic conditions resulting from efforts to address it. This publication discusses key considerations and issues for accounting and financial reporting related to COVID-19 and the CARES Act broken down by topic area and industry.

Overview of COVID-19–related accounting considerations

As the spread of the pandemic increases, entities are experiencing conditions often associated with a general economic downturn, including, but not limited to, financial market volatility and erosion of market value, deteriorating credit, liquidity concerns, further increases in government intervention, increasing unemployment, broad declines in consumer discretionary spending, increasing inventory levels, reductions in production because of decreased demand and supply constraints, layoffs and furloughs, and other restructuring activities. The continuation of these circumstances could have a prolonged negative impact on an entity’s financial condition and results.

This Financial Reporting Alert discusses certain key accounting and financial reporting considerations related to conditions that may result from the COVID-19 pandemic, as well as various industry-specific considerations.

Updated September 18, 2020

This publication was updated on September 18, 2020, to add disclosure considerations related to the effects of the COVID-19 pandemic on an entity’s financial reporting. See Appendix E for a list of affected sections.

The significance of the topics discussed will of course vary by industry and entity, but we believe that the following accounting and reporting issues will be the most pervasive and challenging as a result of the pandemic’s impact:

Key accounting and financial reporting considerations related to the impact of the COVID-19 pandemic on the following industries:

Entities must carefully consider their unique circumstances and risk exposures when analyzing how recent events may affect their financial reporting. Specifically, financial reporting and related financial statement disclosures need to convey all material current or potential effects of the COVID-19 pandemic. It is also critical that management understand the risks entities face and how they are affected by them. Further, SEC registrants must consider whether to disclose information in areas such as MD&A or the risk factors section in addition to their disclosures in the footnotes to the financial statements. The remainder of this Financial Reporting Alert is intended to address these matters.

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Accounting and financial reporting-related resources

Contacts

If you have questions about the information in this publication, please contact any of the following Deloitte professionals:


Christine Davine
Partner
Audit & Assurance
Deloitte & Touche LLP
+1 202 879 4905
 
Curt Weller
Partner
Audit & Assurance
Deloitte & Touche LLP
+1 415 783 4995

Brandon Coleman
Partner
Audit & Assurance
Deloitte & Touche LLP
+1 312 486 0259
 
Andy Elcik
Partner
Audit & Assurance
Deloitte & Touche LLP
+1 212 492 3811

Chris Rogers
Partner
Audit & Assurance
Deloitte & Touche LLP
+1 202 220 2695
 
Steve Barta
Partner
Audit & Assurance
Deloitte & Touche LLP
+1 415 783 6392
Chris Chiriatti
Managing Director
Audit & Assurance
Deloitte & Touche LLP
+1 203 761 3039
  Ruth Uejio
Partner
Audit & Assurance
Deloitte & Touche LLP
+1 415 783 4876

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