The Financial Reporting Council of Nigeria (FRC) has released fresh guidelines on the impact of COVID-19 on financial reporting. The guidelines released recently, was the second of such to be released by the FRC in two weeks. The latest guidance targets preparers of financial statements during COVID-19 period.
In a statement published on its website, FRC said the purpose of the guidance was for directors of reporting entities and those charged with governance to assess the risk of COVID-19 at an early stage of the financial reporting and audit process. The guidance therefore serves to draw preparers’ attention to the possible impact of COVID-19 on their businesses with the consequent financial reporting implications which they are expected to give particular attention to, all within the framework of existing body of standards i.e. International Financial Reporting Standards (IFRS).
It explained that, “events after the reporting period, going concern, effects on interim financial reporting, changes in expected credit losses for loans and other financial assets, net realisable of inventories, group reporting, effects of government and regulatory relief programmes on entities and their customers and transparency and disclosures”.
The guidance added that, “the importance of providing all relevant disclosures related to actual and potential impacts of COVID-19 by preparers of financial statements in order to comply with the requirements of IFRS.”
The Council also reminded preparers that they were expected to disclose the principal risks and uncertainties that they face because of COVID-19 outbreak in their interim reports.
Regulated entities such as banks and insurance companies were encouraged to consider any guidance that may have been issued by their industry regulators as long as they do not contradict the provisions of IFRS. The regulator added that the, “guidance does not in any way alter, remove or add to the requirements of financial reporting standards and that professionals are therefore still expected to exercise necessary judgements in the recognition, measurement, presentation and disclosure of information in their general-purpose financial statements in the context of the current pandemic.”