Impact of the COVID-19 pandemic on a company (No. 917)

The Ministry of Finance and the Chamber of Auditors of the Czech Republic have issued recommendations relating to financial statements prepared for the accounting period ending 31 December 2019 and beyond. Management and auditors should assess the impact of the COVID-19 pandemic on the future existence of the enterprise, not only for financial statements prepared for the period covering an emergency.

The management of the entity is obliged to explain the effects of COVID-19 and describe them in the notes to the financial statements. For financial statements prepared as at 31 December 2019, it is also necessary to describe in the notes significant events that occurred after that date and before the date of financial statements´ preparation and which have or may have an effect on the business continuity. If the going concern assumption is not met due to the current situation, this will have an impact on the company's financial statements, as the accounting policies for their preparation change significantly.

For financial statements prepared for the period from 1 January 2020 to 11 March 2020, it will also be necessary to review individually whether COVID situation should be considered an adjusting or non-adjusting event. In the case of financial statements prepared for the period ending after 11 March 2020, it will be necessary to consider the effects of COVID-19 as an adjusting event that has or may have a direct impact on the valuation of assets and liabilities in the financial statements of the entities concerned.

publikováno 02.06.2020