How Coronavirus May Affect Tax and Accounting Services
Like everything else, Coronavirus has affected tax and accounting services as well. Even the regulation authorities have issued guidelines to CPAs on how should they manage their work in face of coronavirus.
The SEC have issued exemption from deadlines falling between March 1 and April 31.
Auditors usually need to do some fieldwork, which is impossible in current circumstances. The regulation bodies are trying to mitigate this need for fieldwork as much as they can through internet. They are working closely with public audit committees to keep auditing process robust and timely.
Steps to determine how coronavirus outbreak in tax and accounting firm may affect it
The financial statement accounting from March quarter will provide direct evidence for outbreak’s financial effects. The tax and accounting services personnel must take following steps to minimize the effects;
1. Think of this epidemic as a part of Audit Process. firmly implement contingency counter- measures in your tax and accounting services. This will not only slow down the epidemic, in your office, but also not adversely affect your clients. You can also apply travel restrictions. Do as much work online as you can.
2. You must remain alert to what effects may occur on financial statement accounting due to this epidemic. The pay, goodwill, other intangible assets and stocks are the factors that may be affected the most. Diminished cash flow will affect contracts completion and almost all idle facilities will face depreciation of expenses.
3. As part of your preparations, you can write down the list of your complete assets. You must make complete disclosures about the effects of pandemic on your assets. This way you will have documentation proof for your diminished earnings come the end of quarter. You must also realize you are not the only one being affected. The slump in growth has affected many industries other than yours too. This pandemic will most likely continue to make footnotes in tax and accounting services’ reports for years to come.
4. You can expect the client estimates to be more challenging than usual. Tax and accounting services can expect their assessments of client’s accounting to be more complicated than usual for upcoming time. This complication will most likely occur due to lingering effects of coronavirus, even after it has passed. Inventory, bad debts, sales, purchases, account activity; everything will be affected. The production and distribution of a company will most likely suffer the most.
5. You must learn to apply even more discretion in your tax and accounting services than you already do. restrict the face to face meetings for as long as pandemic threat lasts. It is understandable that the accounting or auditing process can never be fully conducted without face to face meeting. Still, try to limit it as much as possible in favor of electronic means of getting information.
6. Remain alert to what effects the virus may have on your employees or other stakeholders. Ensure that the lines of communication do not shut down as it is critical time for their use.
7. You must keep a close eye on internal controls of your tax and accounting service. Employee illness may lead to the whole office space being declared uninhabitable. And office closures will lead to an effective breakdown in internal controls.
8. Those who were financially healthy in the year’s beginning may find themselves strapped for cash. This endemic must be taken into consideration by the auditors when performing financial statement accounting. Particularly, outstanding loans or debts.
9. When the endemic is over, some companies may find it difficult to survive. You must prepare your tax and accounting services for sudden increase in disclosures.