We are in unprecedented times, dealing with a pandemic that has halted the global economy, the likes of which many of us have never seen, and to which some have not seen since WWII. As we try to grapple with how to move forward, help those in need, support our clients, and stay afloat, it’s wise to understand the impact this virus is having on financial communities across the globe and here at home.
Individual tax deadline filing dates have been pushed back to July 15, 2020, with some arguing that all tax deadlines should be pushed back even further. According to Accounting Today, NCCPAP president Neil Fishman wrote, “The action taken by the U.S. Department of the Treasury with respect to the preparation and filing of 2019 income tax returns, along with any payments that would be due with those returns in many cases, does not reflect the difficulties that have been imposed on both tax practitioners and their clients by the current crisis.”
As many businesses have been forced to shut down or significantly curtail operations, and many individual taxpayers are staying home, the recommendation is that the Treasury grant an automatic extension for filing all returnsreturn and making all payments until October 15, including waiving all penalties and interest charges of individuals and businesses alike.
The public accounting company oversight board has suspended all travel to auditing firms outside of the U.S. until May, with many of its employees working remotely. This has extended to many firms, as employees are now conducting virtual meetings with tax clients, preparing filings, audits, and documents via Facetime, and doing phone conferences.
This type of work tends to jam up IT services as companies try to expand bandwidth, and set up all employees for remote work. CEOs are asking for the patience of both staff and clients alike, according to reports.
Auditors and financial statements:
The SEC issued a temporary exemption from meeting deadlines that falls between March 1 and April 30 for filing annual reports, proxy statements, and other regulatory documents. Companies have to explain why they need the exemption, which extended the deadlines 45 days and refer to the SEC order in their public statements. Fieldwork could pose a particular problem for auditors.
The regulators expressed concern that auditors may have difficulty gaining access to the evidence and people they need to support their audit opinion. This is a fluid situation, and as it stands, companies need to be very mindful of sending auditors out in the field, referring to SEC and CDC guidelines to keep both employees and clients and their staff healthy.
It also impacts revenue estimates involving variable consideration, and for other amounts, customers pay may be affected. The firm also said a range of other accounts are subject to considerable change, including impairments to goodwill and other intangible assets and stock compensation.
How to prepare:
- Make sure your company is prepared to write down assets and make detailed disclosures about the pandemic’s effects on business.
- Expect client estimates to be more of a challenge than usual.
- Be alert to the effect on financial statements coming in.
- Plan audit meetings accordingly with SEC guidance for the time being and take appropriate measures in advance.
- Get IT up to speed and invest in technology to expand remote work capabilities and virtual meetings.
- Pay attention to loan covenants and lender requirements.
While many face uncertain times, we can rest assured that communication and preparedness are our best defense.
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