Updated 1 July 2020
Day by day, the advice around coronavirus is changing. This is equally true with regards to how you manage your finances and deal with your accounts. We outline key priorities for businesses and the choices you need to make. As with any decision advantages and disadvantages need to be carefully weighed up.
The financial reporting implications of coronavirus, together with the Government support, could prove challenging. Our Coronavirus and FRS 102: financial reporting guide provides detailed insight into the implications for preparers of FRS 102 accounts.
Cash is king
Robust management accounts and visibility of cash flows are vital. There are a number of steps you can take to manage your cash to ensure liquidity in the business and to secure continuity in your supply chain. These include deferring tax payments, revisiting both dividend payments and discretionary bonuses, as well as researching government and local authority support.
Reviewing parent company guarantees
Parent companies who have in the past provided guarantees to their subsidiaries to allow them to claim exemption from audit need to think about whether this is viable given the current climate. Whilst they cannot remove the guarantee given in respect of previous periods, the implications of retaining such a guarantee could be much more costly than the headache of more audit work going forwards.
Going concern assessment
Directors are still required to make a going concern assessment. Due to coronavirus, this will require revising forecasts which could affect using going concern as the basis for accounting and result in auditors issuing a modified auditor’s report.
Deferring the approval and filing of accounts
With so much uncertainty it may be difficult for the finance team to prepare accounts, finalise the accounts and provide sufficient appropriate evidence on going concern to the auditor. If no filing, loan covenant or other regulatory deadlines are coming up, it may be advisable to defer the preparation or approval of your annual report for a few weeks.
If you need to get draft figures for a baseline for financial forecasting, business or lending decisions, our accounting and financial reporting teams can help you prepare management accounts or your annual accounts remotely.
If you do have an imminent filing deadline, legislation effective from 27 June 2020 means Companies House are automatically applying filing extensions where the deadline is between 27 June 2020 and 5 April 2021 inclusive, without a need to apply. Whilst it’s now much easier to push back your accounts filing, you need to be aware of unintended consequences. Alternatively, you may consider changing your year-end, but this requires careful thought.
For more information on how we can help your business with the disruption of coronavirus, please contact