Corporate Service Singapore Highlights the Impact of Coronavirus (COVID-19) Outbreak on Accounting

Since COVID-19 outbreak was identified as non-adjusting circumstance, its impact would not be factored into financials as of the 31st of December 2019. Experts anticipated that the forecasts and corresponding assumptions applied might reflect small changes. End Quote

(1888PressRelease) April 22, 2020 - SINGAPORE - Corporate Services Singapore, the leading accounting services firm in Singapore, highlights the impact of COVID-19 outbreak on accounting in the country.

COVID-19 outbreak has impacted many businesses in Singapore; some were affected more severely than others. The critical role of China in the global economy is strongly felt as establishments face pressure in their output’s supply chain and demand.

Singapore’s Ministry of Trade and Industry reported that the country’s economy could contract as must as four percent this year. Businesses in tourism, food and beverage, construction, property, retail, transportation, and some other sectors suffered the biggest hit.

“It is likely that other sectors, including finance and banking, would suffer the impact as well,” said Hans Teo Han Siang, the general manager of Corporate Services Singapore.

Hans stated that entities could consider the potential accounting implications of Coronavirus outbreak on areas that could be affected, including the impairment or write-down evaluation and measurement of fair value.

“In applying the IAS 36 or SFRS (I) 1-36 Impairment of Assets, where applicable, the key question that most organizations had was whether forecasts performed as of the 31st December 2019, should be revised to consider the effect of coronavirus outbreak,” stated Hans.

Since COVID-19 outbreak was identified as non-adjusting circumstance, its impact would not be factored into financials as of the 31st of December 2019. Experts anticipated that the forecasts and corresponding assumptions applied might reflect small changes.

Other accounting implications of COVID-19 is the onerous contracts’ potential provisions if the aggregate expenses needed to fulfill the deal is now evaluated to be higher than the economic advantages to be gained from it. Prospective provision for liable penalties and other ongoing concerns are also amongst the outbreak’s implications on accounting mentioned by Hans.

“An establishment shall not prepare its financial statements on a going concern basis if the management decides, following the reporting date, that it plans to liquidate the establishment or to cease market, or that it has no other alternative but to carry out such action,” explained Hans.

“Management should consider the effect of the outbreak on the entity’s economic situations and determine if the circumstance has introduced a material uncertainty to the entity’s capacity to continue as a going concern,” added Hans.

As the Coronavirus outbreak continues, its impact is now being factored into the establishments’ financials. Hence, management needs to consider possible accounting application in response to the outbreak.

Hans stated that management might proactively engage with their debtors and creditors to review the terms and conditions of payment. “It is crucial to evaluate whether any important changes in such terms and conditions would modify or extinguish the financial instrument, which leads to distinct accounting implications,” explained Hans.

Corporate Services Singapore offers top-rated accounting services in Singapore. It was founded back in 2010 and became a rapid-growing local firm providing quality accounting solutions at a competitive price point.

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