Accounting and auditing regulator — the Institute of Chartered Accountants of India (ICAI) — is set to come out with an advisory note for its members to take into account the impact of the coronavirus while preparing or auditing financial statements. The president of the ICAI, Atul Kumar Gupta, said it was necessary that auditors paid special attention to the impact of coronavirus on businesses.
The novel coronavirus, which has infected over 2,00,000 people and led to the death of over 8,000 people globally is expected to have a strong negative impact on GDP growth in the country especially the tourism, aviation, hospitality and trade. There have been three deaths and a total of 134 confirmed cases of COVID-19 in India as of Wednesday, according to the Health Ministry.
“We will be coming out will an advisory note to members, on taking into account the impact of the disruptions caused by the coronavirus outbreak,” Gupta told The Indian Express.
“It may be the case that an exporter of a perishable goods is not able to export these goods,” said Gupta adding that it is important that the net realisable value of such stock is reflected accurately in the books of a company.
Gupta also said that some companies may also have to create contingent liabilities on their books for failure to meet obligations under a contact and that auditors need to ensure that such liabilities are reflected in the company’s balance sheet.
Gupta said the coronavirus had negatively impacted many businesses and that it was important that this be reflected in their financial statements to give a true and fair view of companies.
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