ICAZ calls on COVID-19-hit firms to make impact assessments

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THE Institute of Chartered Accountants of Zimbabwe (ICAZ) says entities that will be affected by the COVID-19 epidemic need to assess the impact when preparing their financial statements.

BY TATIRA ZWINOIRA

At least 82% of companies are being affected by the COVID-19 pandemic, according to a recent survey by the Confederation of Zimbabwe Industries.

The COVID-19 pandemic has presented new challenges in companies preparing their financial reports as they are already applying hyperinflationary financial reporting standards.

“Entities which are experiencing severe adverse impact from the virus have to make an assessment of their going concern status. The deterioration in an entity’s operating results and financial position since the outbreak of COVID-19 requires a consideration of whether the going concern assumption in the preparation of financial statements is still appropriate,” ICAZ said in a statement.

“Some entities may be so severely affected that there might be material uncertainties related to COVID-19 that may cast significant doubt on the entity’s ability to continue as a going concern. These entities should consider drawing out several sensitivity analyses to make a determination of whether they are still able to operate on a going concern basis.”

ICAZ added: “If there is material uncertainty, this will result in either additional disclosures or a change in preparation basis from going concern to liquidation if it is determined that the entity has no other realistic alternative but to liquidate or cease trading.”