C-19 Series – Financial Reporting Issues

Hello and welcome to today’s Webinar, where we’re looking at the financial reporting implications of Covid Nineteen from speaking to accountants in the last week for the questions that you have been submitting from our weekly Monday morning session with our prophet pro members. My feeling of where things are at right now is that we’ve gone through the shock face. We’ve gone through the phase of not having a role of Iris and and having cruel overs. I think the last couple of weeks have been particularly trying on the last couple of weeks.

Now as teams had to move remotely as Ireland in the UK went deeper levels of locked down. Where I believe we are right now is I believe we’re at the stage where Okay, the initial shock. The initial wave has come. But now business business needs to go on in the new normal. And I hope that the subsidy schemes the wage schemes, the government and sentence that the detail on those on the business owners are getting a better grip. But from talking to accountants, it’s very much that we need to look now at the day to day Business is well,

we can’t forget that s o the purpose of this webinar Mike has looked at financial reporting issues and he’s looked at what are the key problems that the impacting on financial statements. So the day to day work that we’re doing like I do have concerns talking to accountants who are signing of financial statements. It’s great that we have the work signing off our bits, but we now I think today we want to look here financial statements. We want to look at what the key issues and problems are, and that’s what Mike is going to go through for us.

So, like, I hand it over to you and just obviously, like you’ve been working on this presentation over the last week, you’ve been working the issues. You’ve been answering questions, solving problems. But do you have anything to add Mike in terms of an initial introduction? No, no, we’ve Look, I suppose ask couple of weeks. It’s just been all about uncertainty, and it was initially about the wage support scheme on Bo’s thing. The questions that we have now been getting lately. It’s kind of moved back towards your traditional financial reporting issues,

auditing issues that column was going to be covering in the next couple of days, so I mean, yeah, I mean, look, we’re going to try and do today is just address the kind of key topics that have been coming in to us. What I would say is, please do engagement. If you’ve any queries, any observations and he points to raise, please interact with us in the chapel box on. Just to be clear, we again. We have huge numbers attending today’s weather there, and so,

just to be clear, we’re not going to have to answer every question but what we’ve been doing in all our other. Webinars is pleased to ask the question, and if we can answer the question, we will put it out your questions. If you don’t get to answer that in this session, this gives us the materials. Answer the questions for our next session with you, so please don’t do the chat box or in the Q and a box if you answer your questions. But Michael myself can see them here,

and we will answer any questions we can as we go through the session. But if we don’t answer him today, we definitely will answer them for you. We have some handouts of supporting material. And so, Jonathan, perhaps you could put the lake up to the handouts. So that’s down in the chat box, and you will get They are basic overview financial statement checklists. You will get our slide deck from to the public has also created the guy was talking today in terms of sample paragraph, sample wording.

And so you get those Get that material Johnson has put it down below. If you’re watching this on your on the zone, whether our witness, we get it down below. If you’re watching this twenty of our live stream channels and Jonathan and putting in the accounts, I hand it over to you, Mike. Yeah. So I have some slides here, so I’m just gonna just gonna share them up on the screen. Yeah. So hopefully you condone. See, that way we can see that Mikey just need until into into into show view.

Here we go. So, as I said, we’re going to be covering today some of the main financial reporting issues that we’ve encountered over the last week. We’ve broken it down into five sub topics, so the first area we’re going to cover is Theo area of post Balanchine events. Covert nineteen kind of presents, maybe unprecedented challenge that maybe we’re not used to see. And, you know, we’re used to the typical textbook post Balanchine events, like a credit, are a debtor going out of business under under normal circumstances?

There are things like that. So called the nineteen kind of presents a different challenge. Aspires. Impairment of assets go. You know it. It’s Z impairment of assets is definitely back, and it will be back in the in the coming in the coming months. You know, there will be a man increased amount of circumstances where there’s indicators of impairments and obviously where that occurs will have to do unpaid mint review. The next area we’re going to discuss is going concern that’s going to affect Anaugh. For a lot of companies,

there’ll be very few companies that from a you know, even if there are no very obvious going concern issues, it’ll still be a consideration just giving. Given where we are at the moment for topic, we’re going to address our your directors of court disclosures, so obviously just to incorporate things like your principal risks and uncertainties. Future developments, events since the year end, etc. On the last time we were going to cover is just your judgments and key sources of estimation, uncertainty that’s required for companies of playing full efforts one or two.

So there’s just before you go any further, like there’s just a few questions in there, folks in front of downloads. Yet the downloads are walking and so so Cage has gone down. We think the number of people who tried to access at one time and so we’re working on a fix on. If we don’t have the handouts here right now, well, I’m sure the technical team will find a way of getting the handouts to you. And in the next five minutes, or keeping eye on the chat box,

I let you know when the handouts and they found a workaround, but it looks like the pages crashed with too many clicks. All of the one time Mike, can you go? Yeah, So, as I said, the first, the first area we’re going to deal with is post Balanchine events. So obviously that’s that’s driven by by Section thirty two were meant for us one or two. ThinkI consideration here is as to whether, when does the event become adjusting or non adjusting? And you know, I go through the timeline.

A Zoe go through the slides. They’re the little a certain degree of judgement required asses to weather. You know, I think the guidance that we seem to be getting at the moment is thirty first. December nineteen. It’s likely not going to be an adjusting event on DSS subsequent to that we have to you have to consider, and we’ll have to use judgement to consider whether events are adjusting or non adjusting. Another point on post Balanchine events. You know there’s interaction with other areas of rest one or two,

so we have to consider it in accordance with impairment. So under imposed balance sheet events that the receipt of information after the end of the reporting period indication best in asset was appeared at the end of the reporting period. That’s an external indicator of impairments that we need to consider. So where we have external indicators, we need to consider weed to carry out in Fairmont Review to determine if the acid impaired below it’s carrying value and as well as that. We need to just just to delve into that a little bit.

Mawr. So obviously there’s adjusting versus not adjusting events. You’ve clarified that and from a Section twenty seven perspective, So our thirty first of December twenty nineteen year ends, given the circumstances, Mike that have evolved and on, given the fact that there is a potential argument that Corona virus Woz and in existence, the first case was reported in Ireland, the twenty eighth of February. But it’s becoming abundantly clear now that actually well, the circumstances were in the country on the circumstances definitely were globally before the third fourth December people that have assets on the balance sheet and basically assets like property equipment,

intangible assets for businesses that are now mothballed down. You know, the impairment circumstances and indicators. Is there any different treatment in terms of impairment being in adjusting inventive person on adjusting event or there’s a all fall under Section thirty two over for its Final Two Ultimate Well, it Z, your question is kind of as todo as to be. The timing is the thirty first since the impairment peace. I am saying now that there there are entities that, as at thirty first, December twenty nineteen impairment wasn’t a consideration for them.

But now, when the financial statements are being signed off in March, April, May twenty twenty, do we apply that first rule of Section thirty two? It’s either and adjusting or a non adjusting event on. Does that supersede the requirements in Section twenty seven or Construction twenty seven and impairment? Going to play on their own? Well, like the starting point is to look at, whether it Zen adjusting or non adjusting event. I mean, you know, if it’s a significant deterioration in the asset value,

we’d be looking at a disclosure at a disclosure in the in the financial statements on Obviously, you know, you can have a non adjusting event that has has had a very significant impact on the figures. Okay, so so so your first your your first fitter. And the first thing you have to look at is section thirty two of efforts to is it opposed by machine event on. Then they’re after you go into the individual camping standards. Okay? It’s either adjusting or not just being if it is, if it is not adjusting its disclosure only on the imperative right down will happen in subsequent periods.

Explosive, but in parent, right down subsequent Exactly on D. U S O thing. This here is an extract of their first one or two. So I mean, I’m not going to read it back. We’ve discussed it already just to distinguish that there are adjusting events and non adjusting events. And three key area is, you know, did the conditions exist at the year end. So a ZAY said the FRC, you’re kind of going frc of guidance out. I think in March on they’re going down the route that it’s unlikely that any company will It’ll be considered to be in adjusting event as at the thirty first of December.

And I think the reason they’re going down that route is that they’re dealing the issue to be the kind of human to human spread of the virus has opposed to the fact that the virus was there in the first case. So essentially, what you’re saying is the FRC have made a call for us that they’re dealing this based on their guidance. They’re deeming this not to be not to be in adjusting event to be a disclosure only. Yeah. And I suppose you also have to think, too, that the event isn’t necessarily the virus.

The event is your debtor That’s gone out of business or you’re property that’s gone down in value. So I suppose. What? Why did your debtor go out of business? It was probably more to do with the response to the fact that the virus was present in the country more soul than the fact that it was contained in a region in China back in December. I think that’s I think that’s through that they’re going down, S O, I suppose. Look, when When we do look at whether something is an adjusting or a non adjusting event,

you hear some key dates. So, you know, on the seventh of December, I think that’s when the first case was confirmed in China on the thirty first of December. That’s I think there’s about maybe ten thousand cases in China and the World Health Organisation have been notified so again, still still contained within China. On the thirty first of December on the twenty fourth of January, first couple of cases reported in France the month at the end of the month of January, there were several new cases in China.

Sorry I quoted the round figure there in December. It was significantly fewer cases in China at the end of December, ten thousand by the end of the month of January, and that’s reported cases. Sena. I think we’ve kind of we can take some some things we can take those of the pinch of salt, that the actual cases were probably a lot higher. Ben the month of February twenty twenty. There were several new cases in Europe during the month on board, eleven hundred cases reported initially by the end of the month,

and it was probably a key one from an Irish point of view on the twenty ninth of February, the first case in Ireland and then with the government restrictions from the twelfth of March to the twenty seventh of March. So the schools colleges closed on the on the twelfth on the fifty of the marriage pubs, the hotel’s closed, and on the twenty seventh of March, we had our what we might call our lock down. So I suppose we need to consider thes key dates when we’re looking at something. So So you know,

if if we had I don’t. We had a shop with stock and the stock was impaired as a result of one of the shutdowns. Okay, well, that’s probably the events that caused the stop to be impaired. So it’s those type of considerations that that way that we need and you’re gonna come in there? Yeah, Yeah, I suppose like what was going through my head and I was going to leave because you probably covered later in the session, but it’s to have the jewel focus of thirty first of December year ends.

But then you’ve also look at your job, and I know they’re not very common year and dates, but for companies, But January February March here ends the on each file that people need to document their decision as to whether it isn’t adjusting event or not, using timelines and using timelines like basically my created this late on the basis. Well, here’s Here’s just a over your timing, but for he to create your own timelines that are relevant to to your specific business on, I suppose, look, it’s worth saying here that there is no probably no perfect answer,

either. All you can do is you can apply judgement and you can. You can apply all that events. There’s not much else you can do because there’s no there’s no textbook answer to this S o. This is an extract from the FRC guidance that was issued in March twenty twenty on again. This is in the context of his ten, but obviously I as tenant difference one or two, they’re they’re more or less more or less the same. So just the second paragraph here. So what the FRC are saying is there is the general consensus that the outbreak of covert nineteen and twenty twenty was a non adjusting event for the vast majority of UK companies preparing financial statements.

For period ended thirty one December nineteen, companies will need to judge how much of the of the impact of Covert nineteen should be considered to arise from man adjusting. Events are for subsequent reporting dates. This will be highly dependent on the reporting date, the specific circumstances of company’s operations and the particular events under consideration. I’m not I’m not sure if the I’m not aware of I asked, issuing any similar guidance, but generally one, guidance would tend to flow from front from one to the other. That Zoe’s that’s that’s useful,

useful guidance there. Yeah, well, it Z, I suppose it’s It’s helpful, Mike, because it’s taking the accounting standard on it, saying, Well, here’s Here’s what our opinion is. You will notice folks that in the FRC language, and there’s a lot of general words used in judgement words. So I would read this guidance and I would say, Yeah, this is good guidance. It’s helpful guidance, but they’re very much you need to exercise your professional judgement on the most important thing from my perspective and you exercising your professional judgement,

assisting the directors to exercise There’s but it’s documented and that it is documented and issues like this. I believe it were into a time now, when director’s involvement in the approval of financial statements they had their responsibilities as company directors under company law that they need to produce them after statements to get a true fairview.

But way all know that most company directors, why they engage accountants, just thank you is because they don’t understand all the financial reporting stuff.

But I think we need to go through a process here of communicating with plants as thing the issues and considerations.

These directors make the decision in approving the find statements, and then it’s up to the accountant to consider in their accountants reporter there.

Auditor’s report. The implication of the director’s decision. So we’re exercising judgement. TFRC is saying You need extras judgement.

You need exercise judgement. Well, how you communicate this is critically important. The directors of the company are the first people who need to exercise the judgement,

and you have to communicate with them in a way so that they understand that on B Did you give them the information they need to make an informed decision to part of their director’s responsibility?

Okay, so I’ve kind of put together just this very basic case study. And again, there’s no no particular right or wrong answer here.

But just it’s more just for discussion and observation. So and situation So X Limited prepares financial statements to thirty one December nineteen.

X Limited has customers in the hospitality sector, including customer A, who owns the hotel. In March twenty twenty.

Customer A permanently goes out of business as a result of the restrictions place standard from Covert nineteen and debt of ten K won’t be recovered.

So the first question there doesn’t adjusting. Event. Of course, the financial statements of X Limited for the December year end was based on the FRC guidance.

I think we’re looking at Well, no, it’s it’s likely that’s in adjusting events doesn’t occur here, but it will be a non adjusting events that we would be required to disclose in a note to the financial statements.

So then the next question. You know what if we were to apply the same circumstances to a January,

February and March twenty twenty year end? And this is where the point of about judgments comes in about,

well, document documentary reasons Why So I mean January twenty twenty. We need to consider you know where there are enough circumstances in place at the thirty first two January for it to be in adjusting event a bit of a grey area there,

probably by February. The fact that the case had got to Ireland and it was wide spread around Europe,

you’re probably into the into the zone of arguing that it is an adjusting event on, probably from March onwards,

There there is, there’s no there’s no doubt it’s there. So again, again, there’s no I wouldn’t say there’s any particular right or wrong answer their butts.

That’s kind of maybe the trail I thought that you might use when you’re arriving at your decision. But then I know you’re going to talk about this a little bit later on,

but you have seen some insights into P. L. C s who have signed off on it opinions in February and those PFCs opposite,

I think, for they are they are making disclosures for December, your ends, everything. They are making disclosures.

Now again, I suppose one of the things and we’ll be talking about it as we go along. It’s kind of hard enough to get any,

you know, to get recent examples, because I don’t think there’s not been signed at the moment. So I mean,

it’s, you know, and you know it’s hard enough to get get up to date material. But yeah,

there are, There are disclosure is going in for for those types of events, all be is that in the last couple of weeks it slowed down.

As to accounts that have been signed off That was the final question here. What if the customer went out of business in January twenty twenty?

What’s the December year and implications? I suppose the question you need to be looking at here is, well,

did the customer go out of business because of covert nineteen? Or was it just your standards, your standard liquidation?

So if it’s for reasons other than Colvin, nineteen, and if they did go out of business in January twenty twenty,

it’s likely that it was for other reasons. You’ll be going back and your standards. Debtors post balance sheet events whereby,

you know it’s usually an adjusting event because the conditions would be deemed to exist at the year end date.

So again, this is kind of just a couple of general points, so document documentation. And again,

this is more of an auditing point. That column will be covering on Wednesday S. A documentation of post Balanchine events to support the disclosures is key.

Given the changeable nature of the pandemic, it’s more important than ever to consider post Balanchine events right up to the date of sign off.

So that’s it. That’s a huge point, because I think now, more than ever. Things are things are nearly changing on a day by day,

week by week basis. So it’s it’s important to consider any any changes right up to the data sign off on Ben.

That’s just twenty nineteen year ends will likely not be in adjusting event. Substantial chill information about the virus didn’t emerge until twenty twenty,

and then twenty twenty years. It’ll require higher degree of judgement. So here, a couple of of circumstances where you might have adjusting post Balanchine events.

So post year end an RV issues as a result of covert nineteen. So is the recoverable amount nest in the carrying amount?

So then you might have that situation whereby no, your heads goods with stock that’s that’ll go obsolete for business will close.

So, for example, your flower shop or some someone like that who had a stock stock of writers and then had to close debtor has gone out of business property impairments.

That could be a difficult one at the moment, because I don’t think there’s much property changing hands, so it’s kind of property area.

It’s there’s no real live data to see how far properties can be impaired until be gift until we get more transactions happening.

Changes in accounting estimates and you know anything held it fair value as well. So you know, and we’ll be talking about that when we go into into impairment.

So what’s required from the disclosure point of view? So if we have a non adjusting event, so there’s no adjustment required to reflect the events since the year end,

the nature of the event should be disclosed. Andan estimate of the financial effect or a statement that such an estimate cannot be made.

What was that Z? That can be a difficult one because, you know, it’s kind of certainly,

if you’re signing off something today, it can be difficult to quantify. Well, what’s the actual financial effect on the year end balance sheet figures,

Because, you know, at the moment, every place where is closed down on, do you know that might be generous,

that we think of recoverable that aren’t recoverable and so on. Mike, obviously we’re working towards a point here where we have a Siri’s of of generic disclosures,

but I think that I think the most important thing here is that I don’t know whether generic disclosures were going to cover this on doll can’t was hate to hear this,

and it sounds like something that you might hear from. I don’t know the length of the institute’s well.

You have to exercise your professional judgement. You have to exercise your professional judgement. But right now, Mike,

there’s nothing. There’s nothing we have addressed that it’s there’s no one size fits all here. So you’re giving us the principles of the concepts you’re giving us,

what the standard say. But it’s way got so many unknowns, an estimate of the financial effect or a statement of such an estimate cannot be made.

It feels like for some businesses and that they’re going to they’re going to have to make a general a general statement that estimates cannot be made right now because we can’t Yeah,

like I’d be in agreement with that. I mean, yeah, I just saw your point about the general general generality of disclosures.

You know, things have to be specific and everything it be be different based on the company that you’re doing the type of sector that it operates in geographical region that it operates in and so on.

So I mean we have. We have some handouts there today with some illustrative examples. Obviously, they are what they are.

They’re illustrative examples, and they’ll be It could be tailored. They could be used. They could be amended as according as appropriately so.

But yeah, I mean, disclosures will be need to be tailored quite a bit, particularly in the directors,

of course. Going concern, notes, etc. A swell as most balance sheet events. So onto your adjusting events.

So straightforward enough adjustment is required for the amounts recognised in the financial statements, including related disclosures to reflect the adjustments.

So that’s that is what it is. We have to adjust it and just thank me. And even in terms of adjusting events,

might I presume from accounting perspective that the directors need to make the disclosure around the adjusting event when they when they’re doing the just adjusting event.

But they’re still going to be uncertainty in that so it’s going to be here could be adjusting event that now they’re still uncertain.

Then, in an accountant’s report, it may be okay, but in another report, well, then you’re probably looking here at an a a meeting woman on other matters paragraph or an emphasis on paragraph drawing attention to the uncertainty.

Yeah, absolutely. And I mean as well as that. You’re probably looking at disclosures within your judgments and key sources of estimation on certainty,

paragraphs and then in your director support. Then you’re probably looking at, you know, principal risks uncertainties on all that that comes with it.

But it’s ah. I mean, some of these will be unquantifiable for for six, twelve months until things settle down and be kind of you can see what we’re left with.

S O. I suppose the next topic to move on to then is just the area of impairment on.

I suppose impairment has been there for, you know, since Africa. Since pre efforts one or two,

it has been impressed one or two, but it’s kind of e wouldn’t say it’s been used whole amount in the last couple of years.

But you know, in light of the recent events, you know, impairment will creep into nearly the majority of sets of financial statements,

particularly if you have property potential equipments. If you’ve got debtors exposure stock, it’s untraceable assets, absolutely centuries.

Investments that may not be necessarily listed. Investments intercompany loans. And it’s like there’s a huge list. Falls under the topic of impairment.

Yes, So there will be. Well, you’d expect that Alan Sheets will take a good hit a za result of covert nineteen.

Because I suppose, you know, like the things we can expect significant, significant negative impact on our asset violence is on the balance sheet.

And that’s no matter how quick the recovery is afterwards might be fair. Yeah, that zte true s,

I suppose, onto section twenty seven of F s one or two. So one of the external indicators of a parent is that significant changes with an adverse effect on the entity have taken place during the period or will take place in the near future.

The technological America’s economic or legal environment in which the entity operates. So, I mean, you know,

covert nineteen were kind of looking at potential impact the Marcus, and certainly an impact to the economy on also another indicator of impairment is where evidence is available,

obsolescence or physical damage of an asset. So, again, there, that’s your issue. As regards stock in less than it’s an RV.

So I mean, this is this isn’t by any means. A complete list. But, you know,

areas that might show signs of impairment. So you have a nice year. Debtors S o R. Det has gone out of business.

Are you reach of settlements with your debtors that you’re not going to recover the full amount on stock? Are there any stock cost?

An RV issues property. So is are you carrying your property at above Above? It’s recoverable amount. Good.

Well, are there signs of impairment on this investment in subsidiaries that does your company on subsidiaries that have reducing value as a result of Corbett nineteen on group loans?

You know, are you are you all the rounds from groups that since covert nineteen are no showing signs of impairment?

S o what we were? What? Disclosure requirements in relation to a parent S o. We were required to disclose thea amount of the impairment losses recognised,

reversed in the period and the circumstances leading to it Andre recognise and parents in the penal unless it’s raised to a re valued asset.

In which case we recognise is in our statement of other comprehensive income, I suppose, obviously regulating impairment in the PML.

So for re valued asset. You recognise your reverse the revaluation down to the original level. And if the impairment exceeds that,

then you could potentially in a situation where you’re recognised the piano on the reversal of the revaluation. So depending on the level of impairment,

you could have a jewel a jewel adjustment there. Yeah, right. So when we’re looking at in the impairment calculations,

we take the higher value of fair value, less cost to sell and value in use. That gives us our recoverable amount.

Um, so then way. Look at it. We might have a situation whereby we have relied. We’ve had to have an asset that it’s fair value might be less.

And then we’ve calculated its value in use. And that’s been used as the basis of establishing the recoverable amount.

Obviously, your value in use is going to be based on on cash flows on bond with covert nineteen we can expect to cash flows are projected future cash flows tiu reduce.

So I think any assets that’s kind of been held on the basis of value in use could potentially be in trouble as a result of court with nineteen value and uses the future discounted cash flow derived from an asset,

our cash generating units. So we then compare recover recoverable amount to carrying amount. And if our comfortable amount is less than are carrying amounts,

then we need to appear. And one of the issues like which you’ve alluded to is. And one of the big saving grace is that was used in the last recession was when property values were impaired.

And if the director’s could produce Castro’s and projections that demonstrated the value in use was hiring the carrying amount that became the solution for a lot of people.

Okay, so obviously that still is a solution. But now we’ve got a double whammy, because now there’s such uncertainty in the short term over the next three to six months that the assumptions underpinning cash flow projections will be highly subjective.

Oh, I just want to highlight this one thing. This makes a significant difference if you are putting on accountants report versus another report.

Because if you’re putting on another report on bond, the assumptions that are underpinning and this could result in a modified opinion from another perspective,

even where people have used the value news calculations so the basis and estimates behind the value news calculation it comes something that needs to be heavily.

If you’re doing an audit of set of financial statements on, it needs to assess the value in use calculations.

And if it’s an accountant’s report that you’re signing under issues forty four ten, the exempt accounts report and here’s the reality again,

we have to be careful of impairment is really it’s The accountant has explained this to the point and then telling,

telling the vast majority of SM he claims to go off and do a discounted value in use calculations, probably double Dutch to them.

So whether you’re an accountant or non ITER, don’t have you going to be instrumental in facilitating this regulation and facilitating and the assessment of impairment.

Very, very careful Did you know across the line? And you don’t cross the line between the wreckers responsibilities and Truman strong average of responsibilities.

Obviously, editors have a much bigger implications from an ethical standards perspective. Yeah, and it was a big one there,

too. You could have like the lights for factory or something like that. That’s your cash generating unit.

We’re looking at value and use. You know where you were using this kind of cash flows. If the factory is closed.

Well, then that just that that creates an issue from a from a cash point of view that it can be very difficult todo to look a value in use.

Calculations that way probably would have to go back to the fair value and take the hit there. This was the next topic to move on to Is going Concern Way.

Haven’t we have a question here? Okay, so there’s a question from David just to be clear. Are we saying that for thirty first,

seventh, nineteen years? Although Cove in nineteen itself is not in adjusting its effects on debtors and impairments in early mid twenty twenty,

maybe adjusting items or does that only apply from the thirty first of March twenty twenty onwards? Your INS only.

And so so. So Mike, like your take on that is the FRC have come out. They have given guidance that for the vast majority of cases,

thirty first of December hearings. It’s not in adjusting item. Okay, so it’s a non adjusting item.

It may need to consider it and disclose it, but then deal with what we’re saying is absolutely based on the timelines that might put up considering your attorney.

First. December nineteen year ends thirty first of January that there wa s’more signs of this. But once we get into February for UK and Irish accountants,

once we get the February out clearly assigns match. Absolutely so. Thirty first. Match your ends. There is no I don’t think there’s much the base and when you’re cool with nineteen isn’t adjusting or another just like him covered.

Nineteen. And for the vast majority of businesses do this wasa circumstances of event is definitely considering your turn First of March hearings,

but probably you want to look at it from your February your ends as well. And what we do think alike.

Yeah, no, I’d agree with that. Like I mean, based on the FRC guidance there, we’re going to take that December is not adjusting on.

Then it’s It’s based on judgement. They’re after us to as to where does the point come that it does become adjusting.

So like you said, it’s January question mark. February probably March definitely would be my thought process, but it does depend on the on the individual circumstances.

I mean, for example, if you have a debtor in China the day it might appear a busy earlier than if you had only debtor in Ireland that that went out of business again.

You have to kind of you have to base it on the circumstances that play as well as just looking at the timeline.

Yeah, so So So, for example, just looking at the basic timeline. The Jupiter, like,

you know, there was announced cases in France, so anybody that has group operations or significant customers are significant business in France or in Italy.

It’s going to be in adjusting event there, clear early, defined the adjusting event there earlier been necessarily Irish UK,

where it was later reported. Yeah, exactly. And it’s like I said, it’s the circumstances of play on that We need to look at there.

I suppose I’m going to move on to Topic three, which is three area of going concerns. So again,

this is going to impact impact hugely on a Zoe was spoken about last week like those companies that we would have cost,

you know, there’s no issues here, John Proof bulletproof. You know, if we were to look at the set of financial statements at the start of February on the same company in the middle of March.

Circumstances have changed massively. A company that is a huge assets on the balance sheet that was trading Well,

all of a sudden they’re they’re they’re shut down temporarily on your cash flow can potentially be a huge issue that down the line.

So we need t o have you have a lot of consideration relation to going concern for all of the companies.

Now we also need to look at, well, the appropriateness of the going concern basis. So I mean way kind of have to take it for granted.

Things have been who wants a positive? But there’s been a certain amount of goodwill in the last couple of weeks,

but we have to take it for granted that the companies will fail as a result of covert nineteen and there will be liquidations and there will be cos that go out of business.

So we need to look at well, okay, well, the appropriates of the going concern basis is the only realistic alternative available to management that will make today’s or that they’re permanently cease trading?

Yes. So some some companies Mike, we’re going to see what we’re going to see. Some companies who will be on a not going concern basis and obviously liquidation comes for companies that are on a not going concern basis.

Usually, but accounts be prepared on that. One concern basis is one consideration, but benders the people who will prepare accounts,

ongoing concern basis that are in trouble. And then there’s of trouble strong companies that irrespective how strong they are,

that they have to take the concepts of ice a five seventy going concern. They have to take the concepts contained in efforts one or two and look at Is that going to serve basis and being adopted?

Appropriate O R. Do they need to make disclosures and then, like, you know, obviously this is all new.

This is all happening. There’s not a huge amount of guidance coming from the FRC. They’re doing some stuff.

There’s no definitive guidance coming from any of the accounts. The institute’s right now for me, the going concern disclosure piece,

from a director’s perspective and in the North to the accounts like the scope, a level of detail in the going concern disclosure really needs to reflect the unique situation of each company.

So So? So obviously we can’t say universal everybody, but even strong cos we’re going to be affected on depending on the seriousness.

Three approaching the wording here. But we could give you an overall structure approaching the wording. Those need to be tailored for individual certain.

Yeah. No, that’s that’s for sure. And again, you do need to consider Okay, Well,

what what are the company doing to address the going concern issues? Because you could have a company that’s being mothballed.

That’s okay. Well, they were trading profitably. They say, I don’t know, a pope or something like that were trading profitably.

The restrictions came in probably around the whatever thirteenth or fourteenth march, and as a result, they’re not trading anymore.

So we’ve let staff go. We’ve we’ve cut staff. Hey, if there’s if there’s any staff required to do sort of maintenance work or any any of that kind of stuff and you need to kind of get into the nitty gritty of what are you doing to address the growing concern situation?

No, because I mean the big issue for the likes of those is that they’ll have a period of three,

four months or whatever the case may be whereby they’ll be generating no sales when they come back. What kind of an environment that they’re coming back into?

Are they coming back into a recessionary environment whereby you know this question? We spend his down. Economic sentiment is down as,

and as a result, sales are down. So things like that we need to be factored into their going concern workings.

I mean, one of the things that we’re seeing in the last few weeks is that there’s very few others actually been signed.

And I think it’s for this very reason that they’re not being signed because, you know, how can you rely on a budget or a cash flow at the moment?

Because we don’t even know where we are. Don’t know how long a lock down will last. We don’t know,

you know. So I mean, obviously, obviously, audits are one thing, and but what we look at company accounts there are exempt like is it feasible for directors in politics and companies to fulfil their directors duties to fulfil their responsibilities?

And for accountants too obviously no accountant. Every accountant cast to sign a report under its was forty four ten,

and every account has to assess whether friend state was getting thrown for review. Do you have any inkling of the moment,

or is it too early? Mike T say, Well, okay, out of the exempt accounts. If you put in really strong disclosures,

we don’t have the formal opinion on it. The barrier in relation to a sufficiency inappropriateness about what evidence is gone.

And it is a too early to talk about non our company’s signing off and directors reports, putting in very strong,

so cocksure, ongoing concern. Well, you have to look at while what’s their their their duty is to prepare accounts that give a true in Fairview.

And I mean, if you have serious going concern issues, you know you need those disclosures there. Obviously,

the fact that it’s not all just there’s there’s less of a requirement. But in order to show a true in Fairview,

you know you should be putting in disclosures because disclosures like that would be fundamental to the user’s understanding of the financial statements on our concern.

Right now, folks is even though there’s a significant lower barrier as I demonstrated that our concern is that will could the directors,

they asked. So so so whether there are exempt insolvency events and considering whether directors have fulfilled our fiduciary duties,

whether they’re compliant with the law but in the final statements. But there’s really what I’m trying to do here to emphasise there is a significant requirement here for the directors if they’re producing financial statements that there signing off and they’re saying,

yes, these accounts were prepared in accordance with applicable financial reporting framework. There still is a significant requirement,

audit or not, for the directors to be careful from their own perspective and then for you was to compiling accountants.

In the case of mono exempt status statements, consider those implications relieving. Yeah, and obviously you don’t want your name to be associated with the cancer or misleading.

I mean, if it’s obvious that there’s going concern issues, you don’t want to be signing off on something that’s that is effectively,

effectively misleading. Just on the third bullet point there, so theatrical sea of disclosures we’ve addressed that on Do you know,

I think I think there’s going to be a greater focus on adequacy of disclosures. Also, we’re going to discuss a fresh one or five as well.

So way get that’s in one of the one of the next slides. So this is just I’m not going to read this back,

that this is just a extract of section eight, section three point eight and three point nine of F S one or two that explains that the entity will prepare accounts on a going concern basis unless the only realistic alternative is to liquidate or cease trading.

And if if we’re doing the break up basis, if we’re not doing the going concern basis, we prepare them on the break up basis.

I was. I’ve had a sub categorised going concern into four categories. So and I think it’s important to consider from a company point of view and also,

from an auditor’s point of view, what category does the company fit into? So I suppose the best companies not affected by covert nineteen or will perform better as a result of us.

I suppose that there is not too many companies in this category, but there are a few. I mean,

if you’re if you’re in food retail. In the last couple of weeks, things have been looking fairly good.

If you’re in pharmacy, you know that things have been having looking quite good, too. So that’s what that’s one category,

the next category down, so affected by cold with nineteen. But the directors are satisfied that no material uncertainty exists.

So what you might have there is a company that it’s trading. Well, maybe there’s a knish and initial slow down staff are working from home.

Was things were continuing as normal? But there is a bit of an effect. Why, of course,

nineteen. Then you have your in that second scenario, Mike, we’re saying that a minimum mentioning it in the director’s report and referring it to the director’s report and in the notes to the financial statements.

Yeah, yeah, I I’d be in agreement with that now. Yeah, and I suppose it would also depend on the circumstances to a za general rule.

I think that za about right the third category down, affected by cold at nineteen, and the directors believe that the material uncertainty exists so again these air the next year cos that maybe have been shut down overnight for a temp temporarily shut down overnight while that while the lock down continues.

So in that situation, you know, e mean you might categorise your hotels, your pub’s anyone in the hospitality tourism industry that the likes of those kind of cos there because there’s a material uncertainty relating to its ability to continue as a going concern.

So, you know, you have to have a nose in there maybe explaining the situation, explaining the material uncertainty.

And so I have an example as we as we go through the slides on the final category and again,

I don’t know, I don’t want for their or we won’t be there yet was cos severely affected by Cold with nineteen,

and the directors needs to consider it. Liquidation is the only realistic option on again. We might not see too many of these in the initial stages.

Push. You can expect to see them ast time passes. I suppose one of the one of the key things is you know there’s going to be a huge no credit squeeze in the next couple of months and you know something?

He’s just just one survived that, folks just in terms of a very practical question. We’re getting our own financial reporting.

So what if you have somebody who perhaps falls into the third or fourth category and Mike Slide? Well,

if somebody thought of that before category on Mike Slide and like just whether it’s on a drama exempt. Obviously,

the bars much lore for are exempt, but directors rushing the saint of financial statements that are in a compromised position.

Accounts are kind of going, but there’s we don’t work. We need to get the accounts out to issue the bill,

and I would suggest that you issue draught accounts and you issue the intern Millar progress bill. And because,

you know, I understand that you want to keep your work flows going. I understand you want to keep your building going on and on,

and you’re looking at some of these companies that you don’t think it’s going to be around later in the year.

We’re going to get the bill out, get paid well, that’s where that’s where I would if they’re not on a subscription model already.

That’s where I would look at that look at intern bills, get the accounts out, issued them and draught format,

but highlighting to the director’s implications from an insolvency perspective. Obviously, the four point is severely affected ones they need t o look at.

Well, okay, what are the implications here, then? Having a draught sort of accounts to help them make informed decisions as part of their directors responsibilities on.

Just make sure that you raise the building, you get paid. And because these people, if we were if we were on a different kind of focus here,

these people were severely affected, and I want to. A liberation may be the only realistic option, but these people are not gonna pay you in your business.

So we just way want to make sure that we get paid on. We get paid on a progress basis if we continue to invite them.

Yeah, so again, just to look at the four categories. So your top categories, which I think way said we’re kind of the likes of Maybe your food retailers are pharmacies.

So possibly no disclosure required from going concern point. That’s depending on the circumstances. Obviously, if there’s anything that means the disclosures required,

then that should be considered on probably no immediate issues. You know, any long term issues or anything like,

you know, property values in the balance sheets, things like that that you that you need to consider us.

Generally, there probably won’t be too many going concern issues in that top band of companies. Your next company then.

So these are your company’s, where you’re satisfied that there’s no material uncertainty. So so the companies with an initial slow down,

but the directors believe that this is short term. They will return to normal once the period passes. To return to normal.

Return to something that resembles normalcy is probably a more appropriate comments. So you possibly needed a going concern note explaining why there’s no material uncertainty there.

And then you’ll also need to factor that you need to consider in your budgets as well. Wait, there’s no material uncertainty.

And why you think that that Corbett nineteen, doesn’t cause the material uncertainty to exist? Then you’re to more severe categories.

So these are your companies that have been hit hard by cold, with nineteen temporarily shut down Well, just indicate that it would be a difficult trading period.

Costs have been caught as much as possible to keep the business alive during that period on. Do they believe that the going concern basis is appropriate for the material uncertainty exists in this situation?

You’re likely when I need it when you will need a going concern. Noting your financials, explaining that the material uncertainty exists possibly also need to consider putting a going concern.

Note our reference to the growing concern issues in the director’s report. Also, because you know it Z explaining that business.

And it’s it’s principal uncertainties on then your your final bands. So where the only realistic option is to consider is too permanently cease trading or liquidation?

So that’s where the company plans to be liquidated or permanently ceased in the next twelve months. We’re looking at the break up basis.

We need to disclose that fact in the financial statements and the state assets to get realizable value so any fixed assets become current assets and so on.

And let’s just be clear to go back up that slave, like a company that plans to liquidate are permanently cease trading.

Sometimes we will practically see knees within group structures, or there is a strategic decision to cease this company trading and the accounts will be prepared on not going concern basis.

We see them in J V’s, but we tend not to see them and companies who are actually going to liquid it cos they’re actually going to liquidate.

That last set of financial statements is often not necessarily approved and submitted. And so I needed have very early signs of severe distress on There’s not a visible way out.

This is going back to my point of Joe rather than making they accounts and finalising them on a not going concern basis.

If something is going to happen in the coming months that maybe they need to get some insolvency advice now before approving financial statement so they have nothing,

they will come back and put them in the ass later stage. Yeah, so the next section just is what should a going concern note with the material uncertainty look like?

And you see that part of this is shaded because a lot of the requirements for going concern notes are driven by eyes of five seventy.

So if if you’ve unaudited set of financial statements, those disclosures would be would also be driven by Eyes of five seventy so that the auditor is happy that those items have been have been disclosed.

So what should it includes? So details of the uncertainty, including a description of the events or conditions casting doubt on the entities ability to continue as a going concern Management’s plans to deal with these events clear this look.

Closure that there is a material uncertainty which may cast significant doubt on the entities ability to continue as a going concern in a statement that it may be unable to realise its assets and discharges liabilities in the normal course of business.

So, back to your point earlier days, you know, the likes of this needs to be quite tailors to the company.

I mean, there’s no probably no off the shelf disclosure that’ll fit. I mean, you know, we need to describe the events in conditions because it’s it’s in this situation.

It’s sectoral, It’s different, it’s it’s global, it’s different. It’s each individual company, depending on their balance sheets,

and they’re trading circumstances. It’s not even sector on that situation, so it’s not where we are right now,

and I assume Mike the best practise will development involving. Obviously we want to try and leave that to give you the answer straight away.

And what in a vacuum of knowledge, and it’s very difficult to create pro forma disclosures. Mike does have one of the handouts did you got for this session?

Mike has got a whole Siri’s of sample disclosures the way produced for you’re right now. So it’s not that we’re saying,

Well, there’s nothing available but just thistle thing at the bottom. Mike has driven by Isil five seventy.

Okay, so So So when you look at efforts to you’ve got to put in details of the uncertainty I supplied seventy clearly applies to bits.

But from our perspective, if it applies to audits and you know this disclosure structure by Sav, it’s even though you’re not doing a novice,

that’s still best practise in terms of the disclosure and in none of that s O, then what? Then we move on to F s won all five.

So obviously first one on five, we’re not dealing with the fair presentation framework. We’re dealing with compliance framework.

So in the majority of instances where you’re where you’re, you’re using your religious exemption on drift under, but you’re small companies regime.

There’ll be very little disclosures required from NFS one or five point of view where things become a bit more more.

Where there’s a bit more disclosure required is where we have unaudited set of that first one oh five accounts Esso Eyes of five seventy.

It deals with the whole issue of financial statements being prepared under a fair presentation framework and a compliance framework.

And the compliance framework is obviously referencing to efforts one o five. And if we are doing accounts on the reference one or five are north,

would need to look something along the lines of This is, well that the requirements, driven by eyes of five seventy,

will carry through in to NFS one or five set of financial statements. So the number of efforts from all five sets of financial statements being office and obviously is minimal.

And there’s a sort of a flaw on Irish legislation which allows for micro entities being admitted because we have have laid filing,

so this doesn’t really apply in the UK it would be just that they’re like the other. Having an efforts will find set of plants status of is negligible in an Irish context.

You may find it more often and so on were quoting the relevant section of legislation there if you’re doing an Irish of it.

So just to be clear on the first one to five, if we’re doing accounts compilation Z, we’re working within a compliance free work.

So for a small fund is very, very limited in terms of everything we’re talking about today. Yeah,

absolutely. Andre. Yes. Oh, it’s when it’s when it becomes audited that the issues arise on board,

I suppose again, it’s one for Wednesday, But But from an auditor’s perspective, there’s a requirement on referenced one of five that the accounts aren’t misleading as it goes to positive statement to say that they showed through in Fairview.

So again that Z just to make the distinction between what is that an audit? Exempt Accounts and Reference one.

Oh five. Okay, Mike, just when we’re as you’re transitioning onto directors reports there, there’s a question in from Billy,

and the question is, if you have a credit goes out of business, how do you reflect that pension game that opposite to impair of assets?

So So, Billy, I suppose the first thing is, if you have a creditor is a stay and if it is a limited company,

well, that money is still old. If it was legally owned before they went out of business, it’s still asking that kind of business.

So until such time as the company is fully liquidated, I don’t think you’re in a position there like that off.

And it is a sole trader who was shut up there, George. And on the game they set up their doors and they want to wonder.

Resurfaced sometime in the future. And if if they’re old money now and on there legally, all that money,

I think that might be a little bit early in most practical circumstances. If I could think of On My Feet Billy the right,

that back, Yeah, I agree with that again. If it’s a company, I would imagine the liquidator will pursue it.

If it’s an individual that imagine legally, that right is still there. So onto the four topics. So directors report.

So again, there’s a few areas where we require a bit of disclosure around Cove in nineteen. So I’ve picked off five areas.

They’re so principal risks and uncertainties. Future developments, particulars of events since the year end going concern disclosures potentially and then press one or two.

Actually, that should be the small companies regime versus the versus Company. That’s not small. So obviously,

if you’re if you’re a small company, you’re disclosures that reduced. Although you may wish to maybe volunteer some of the information given given the circumstances and so that this is just a selection of the director’s report.

So directors of port should include a fair review of the business of the company on the Prince description of the principal risks and uncertainties facing the company.

And then there’s this other subsections beneath that place requirements on again. The company that applies for the small companies regime is exempt from the requirements of subsection one,

so principal risks and uncertainties. So it’s required for companies not availing of small companies regime. Given the rapid emergence and spreading of the virus,

the required disclosures were will change over time as the pandemic develops across the region’s. I will come back to that point of a slide just under Honda next lie just to speak about that,

and so the risks and uncertainties they should be specific to the company and consider the specific issues. So for example,

Have you got companies with debtors? So have you got a credit, credit risk or exposure on your on your debtors?

Ledger left. Letters that you thought were recoverable may not be recoverable, given that given the circumstances, companies in the hospitality sector so are we.

Ari. In an industry where by we’re reliant on consumer sentiments and discretionary spends and, you know, the economy prospering because then there could be an economic risk there.

When, when restrictions do end, then companies trading in in highly affected countries now adore how relevant this is.

But hopefully, you know, fairness. Our government seem to be taken simply quite proactive in their approach,

so hopefully we’ll be out of this as soon as we can be. But when we do get out,

what are they going to be? Other countries that are still involved that are highly affected? And does our trade with those countries get?

Is that going to be effective in future? So it’s not just were not just when we’re looking at principalists uncertainties your mike,

we’re not just looking at National Economies National Impact Training International. We have to look at where we’re trading into and where our food supply chain is up.

Yeah, exactly. I mean, I suppose looking if you were if you were trading with America at the moment,

obviously, it looks to be developing at a rapid rate there. So you may wish to look at your market there and see well,

is there is a risk associated with that. That’s what I have in front of me here is in preparation for this.

I was just trying to get example disclosures that air kind of on live sets of financial statements. So there’s very few s enemies that we could find with disclosures.

But this first one here is this is the latter. So the hotel group s O on the putting on the twenty fourth of February.

They approved their financial statements on I just kind of went through. Just see. Okay, Well, how was Corona virus impacted on that unfairness on the twenty fourth of February?

I didn’t have a huge consciousness about Corona virus, you know, I knew it was there, and it was potentially an issue,

But it wasn’t a huge deal in my world. Probably not sure what it was like in yours days,

but, you know, It probably wasn’t at the forefront of everyone’s thoughts, I think until the until the rugby match has been cancelled.

Yeah, but like I think that I think it is very, very important here that that on what you’re expressing is yes,

this is a real leave directors report. This is a real live directors report was signed off. But the world we lived in on the twenty fourth of February versus the world we live in on the sixth of April,

six weeks later is a whole different world. And you know, there’s not significant numbers of financial statements being signed off.

So it’s just the timing in the context of this report is critically important. Oh, yeah, and I suppose he had just to clarify.

I’m not saying that there’s any any incorrect disclosures. All I’m saying is that deals with the risks that were present on the twenty fourth of February on.

Do you know, if you were to look at the same set of financial statements a few weeks later,

you know the risk will have evolved as the time passes. So again, this kind of reflects where the risks were on the twenty fourth they re so.

It was kind of a commentary saying OK, we’re aware of the risk of Brexit were aware of the risk of Corona virus.

We’re monitoring it and we continue to monitor it on Do you know, obviously a hotel group. I think within ten or twelve days,

probably all the hotels close their doors on. Do you know if you were looking at the risks ten or twelve days later,

it’s just a Corona virus just took hold on the risk involved. And, you know, I think from from what would we would have seen,

I think it was a baby pennies back in February. I think they released a statement just commenting on the risk of Corona virus and that it was a supply chain risk and that,

you know, it could potentially impact their their supply chain in China and again for the likes of pennies of shops closed now.

So that’s the risk that was present in the middle of February is a different risk that’s present now. So I mean,

I just make the point to kind of what’s relevant now might be relevant tomorrow, and it might have evolved into a different risk So again,

that’s just that’s just a sample of what was on the DL ASA annual return. Then we have I think this is gonna be a So again,

this. This assumed this was signed maybe earlier in February because it’s commenting on the supply chain risk. And I know all that.

And then health and safety saw things making a comment on its its workforce and think it mentions about the potential for factories closing and things like that s so again,

this is G S K. That’s a Smith trying S o attention impacts. It remains uncertain. So up to the date of the report,

the outbreak hasn’t had a material impact on the trading results of the group. However, continuing to monitor the situation,

I suppose the first examples that would be that would be interesting are the ones that maybe have been signs kind of towards the end of March,

because then they’ll be dealing with Maybe real risks are really impactful risks. So it’ll be interesting to see what’s what signed on those financial statements.

S o. The next section on the director’s reports just deals with future developments. So again, future developments is kind of one of these disclosures.

That’s just kind of a generic off the shelf, one nearly rolled out for for a lot of companies.

And it’s usually in the kind of context of we continue to develop. The activities of the company are,

you know, well, you know, it’s kind of general positive commentary just to say that there were no significant changes,

a etc. A suppose we kind of have to incorporate Covert nineteen into that. Because although companies might intend on trading,

you know, well into the future and improving things, we have an initial hurdle that we have to we have to deal with before we kind of get back on our feet.

That’s assuming that we’re dealing with a company that’s been impacted by cold the nineteen. So again, I think this is one of the disclosure that would have made it into the handout.

So So you want to just bring up the handout? My just to show people what’s in it for a minute.

I know that will not go through every paragraph of it. Yeah, give me. Give me one second there.

Obviously, I sprung that one on your little bit. Mike today Yeah, it wasn’t expecting that one.

No does. But we’re nearly there now. It takes it, takes a while to find all the sheets and then find out when you want to share.

Yeah, and, of course, when everybody is watching and it takes even longer of this. Now here we go.

Hopefully, hopefully, you can see that now. Yeah, that’s that’s actually the disclosure checklist. Email On second.

It’s the tabby side. I think Mike is straight of paragraphs. That’s the one. Yes, so again,

there’s no one size fits all our example here, but these are things you might wish to put in.

So we’ve gone through each individual sections. Hold, for example, with the director’s report here. So future development paragraphs on.

But I’ve also put in kind of examples. Okay, if you have been mildly affected by covert nineteen,

that’s maybe an example and an illustration. Paragraph. If you’ve been significantly affected by covert nineteen. So if your business that’s kind of been shut down our mothballed,

that might be kind of the wording you might consider going with principal risks and uncertainties. So that’s a general commentary on the outbreak of covert nineteen on and then the same to say that the effects can be fully determined.

What we believe the following That’s the main risks associated with it. Our initial slow down and trading a trick activity during the period of temporary closure,

a prolonged period of government recommendations and restrictions on the movement of people to contain the virus. A potential production in economic activity following the recommenced of trading,

which may result, gives super spending and demand and the reduction in asset values. And again, that’s something that could be Taylor’s.

Taylor’s two suits The company’s needs eyes. Obviously, every company is going to be different, since you can’t roll out the same point for each individual company.

So I want to be. This is still in the director’s reports of events after the band she dates.

So again we’ve these disclosures there, just commenting on what’s happened since the since the balance she dates have commented on the temporary closure of the business on the twenty eighth of March,

which commented on what the director, what did the director’s intend to do during the periods to kind of keep the cost based because presumably a lot of companies okay,

well, staff will be laid off and costs would be trying trying keep the costs as long as we possibly can during the period of restriction.

And then this’d an example of events since the balance she did. Whereby company is continuing to trade during the black down period.

But they’re operating at a reduced level, then no disclosures. So going concern have a couple of examples.

And again, I’ve tried to follow the four categories of slide. So I’m not gonna go down through through all of them but even say,

if we go down through the most severe one s o during the first quarter twenty twenty, the covert nineteen pandemic has spread initially from Asia to Europe and subsequently worldwide.

The initial economic effect of this has been a worldwide slowdown in economic activity and the loss of jobs across many businesses.

In Ireland. There are restrictions placed on nonessential businesses, which has resulted in many businesses temporarily closing and measures designed to restrict the movement of people to slow down the spread of the virus.

Like many businesses, it’s just would have called us because that’s what our pro forma cos. Is called.

Sample Company is exposed to the effects of cold with nineteen pandemic match twenty twenty. As a result of the reduction in the economic activity and the recommendations and restrictions placed on business is the company decided to temporarily ceased trading during this period.

The company has laid off staff reduced working hours for staff who have maintained other costs have also been reduced during non trading period where possible and the company will use government grants.

Government supports providers to businesses during this time based on the measures taken to reduce costs. Directors believe that the company is well positioned to return to full trading capacity once the period of uncertainty passes.

However, the directors believe that the above circumstances represent material uncertainty, which make has significant out on the company’s ability to continue as a going concern.

Therefore, it may be unable to realise its assets and discharges liabilities in the normal course of business. So the idea I suppose,

folks, the idea behind this document, you want to go back to the slides there, Mike on way finish off and we’ll finish off the last Vestiges and on judgments and estimation uncertainty.

But so we’ve created these paragraphs to give you something and obviously we’re watching. Every day we’re watching the market,

we’re developing mawr. The questions were getting based on the questions were getting him based on what people are asking us,

but we’re updating these on an ongoing basis. So this is a starting point. This is not the end point.

This is a starting point, as at the sixth of April and twenty twenty, and how we believe it gives a good starting point.

And but it’s just we need to stay brief. That was, like everything to know rollovers. It’s it’s we need to take it day by day,

keep up in the long term, but deal with it day by day and in the short term. And Mike,

the last topic for our session that you wanted the cover on was and judgments and key sources of estimation,

uncertainty. And obviously this does not apply to Section one a small too small companies. This is only for your large companies,

you know, for your large companies and for those large companies, it’s going to be an out of elements here.

But the judgments a key source of estimation certainly Mike, how we were talking before he came on is that it’s not when you deal with this issue and you deal with this issue to deal with this standard.

All of these standards intertwined what you’ve said in the director’s report. What you build from a judgement perspective,

innovation, a going concern everything needs that needs to stack in. Yeah, And I suppose now, more than ever will be using will be using judgments,

but certainly Well, while this period continues of Lock Down S O. I mean, yeah, we need to disclose judgments,

assumptions and key sources of estimation, uncertainty and that would be impacted by a lot of areas on a lot of areas.

In our financial statements, I mean, are going concern assumption. You know what? If we want to be based on projections on how we help you determined future cash bubbles how we determined that where we’ll be in the next six months if you know,

considering where we currently are. So, like No, no one has a crystal ball here. All we can use is our judgement.

And make sure that Z it was sound Azeris nable a zit possibly can be on, you know, So like the areas that that are likely to be affected by this.

You know, pretty much everything that we discussed so far. Exactly. Exactly. So going. Concern Future cash flow,

property values again. You know, a huge amount of judgments. If you’re looking at something like that at the moment in,

I don’t think we’ll see a huge amount of property transactions and the next the next little while. So you know,

what can we use? We don’t have a market based data. You probably just You could just use our judgement how good that’ll be.

I don’t know. I mean, and that’s one of the reasons why audit opinions, but not a huge amount of being signed at the moment.

Because on certain certainties like that, you know, if things like impairments what Children to be used when we’ve considered whether assets need to be appeared or what judgments have we used when in hearing assets stock provisioning?

Here’s another postman. She’s events. You know what assumptions have we used when considering whether an event was adjusting or Nana Justin?

So if we were looking at that timeline, if something kind of fell in the in the kind of grey area,

what condition assumptions have we used in establishing whether it’s adjusting or not adjusting, and also what one of my basic concerns here.

My God, I know this is a very, very fundamental concern when it comes to the judgments, a key source of estimation,

uncertainty and the accounts production software providers will have given pro forma paragraphs and then given perform paragraphs or people go click,

click, click include that include that. Until that. And but it’s now all of those pro former wordings are kind of kind of gone.

Yeah, we’re going to develop warnings for them, but your accounts purchase offer, possibly an anus. You have one of the really practise providers won’t have updated for these.

So it’s down to you, the complaining accountant, you the auditor and you know that you can you can do work with them on.

Did you Taylor these on a case by case basis? Yeah, like there’s no off the shelf. Well,

you can take her off the shelf packages, but you have to you have to introduce a Bill Taylor in yourself because,

like I said, there’s probably no two companies in the exact same situation. You need to factor in the individual circumstances into into all of those.

Okay, way had a fair idea that we weren’t going to get through all the material in sixty minutes.

But I do want to wrap it up. People get back to their day and we have this like here.

We do have our webinar serious and which were which were running throughout the week. And so we do have a weapon,

are serious running throughout the week. And there’s a lot the dates and you can find everything that we’re doing on seeking the store that come to access our webinars just to let you know if you found it,

they’ll benefit. We do have our financial reporting conference. Obviously believe conferences aren’t happening. So rather than having you guys sitting in for our conference,

but we don’t have taken our life. Financial reporting conference on. We’ve seen running out over two weeks and so keep an eye out during the week for our financial reporting conference.

The whole conference, we had a conference schedule, we tore it up. What, what? What This happened.

And then we created a financial reporting conference two weeks ago when we had to tear that up. So we’re literally creating a financial important conference that we might as well call it the Corona Financial Reporting Conference because we’re going to focus and go into in depth on all the areas on all the topics to want to wrap up right now.

Thank you very much for joining us here today on this on this free weather there. And please do cheque out.

We have our accounts for those Facebook group we’re sending up on our covert resource centre within it within our knowledge hub.

So we were putting together everything that we’ve created over the last two weeks and everything we want to create the next two weeks you built to access that in in the knowledge Hope so kindly very much for joining us today.

And if they see you again, let’s focus on the priorities one thing at a time. What’s the next most important thing to do and let’s get out there and help our clients and let’s get it done and stay safe.

Thank you very much.