GAAP Article to comment on bello Currently, the United States is in the midst of the worldwide coronavirus (COVID-19) pandemic, which is stretching business and government resources alike. Representational faithfulness and transparency in financial reporting is essential to stakeholder decisions in this environment. The need for proper disclosure of financial condition is critical to the survival of the relevant financial accounting and reporting frameworks, as well as the audit profession. That the economic fallout of the COVID-19 pandemic is disrupting business is undisputed. Companies in certain industries, such as travel and dining, are seeing drastic effects on financial results. For example, United Airlines reported that it expected daily revenues to be $100 million lower in March 2020 than March 2019. Similarly, the parent company of Chuck E. Cheese reported a 21.9% decline in same-stores sales in Q1 2020 versus Q1 2019, which it attributes to the closure of “on-premise dining, entertainment, and arcade rooms.” A financial accounting report reflects the assumption that the business entity will continue as a going concern until it is liquidated. An asset liquidation generally has a negative effect on all stakeholders, including investors, creditors, accountants, managers, and the government. Financial statements, including balance sheets and income statements, do not purport to convey the market or liquidation value of an entity; however, managers and auditors must assess and disclose any uncertainties regarding the continuity of business operations on an interim and annual basis. The purpose of such disclosure, in the footnotes that accompany the financial statements and in the audit opinion, is to both inform and warn stakeholders of the risks surrounding the ability of the entity to meet its obligations on an ongoing basis. Now more than ever, there is heightened scrutiny around the ability of business entities to continue as a going concern. Under the GAAP standard, what must be assessed is the going concern of the business. Businesses are being challenged like never before to either adapt or perish. CPA advisors, auditors, managers, and other stakeholders should expect to see increases in going concern disclosures, as well as in explanatory and emphasis-of-matter paragraphs in audit opinions regarding going concern issues. CPAs are well positioned to advise their clients during this time and provide higher quality information to stakeholders that use that information for vital business decisions.
GAAP Article to comment on bello
Currently, the United States is in the midst of the worldwide coronavirus (COVID-19) pandemic, which is stretching business and government resources alike. Representational faithfulness and transparency in financial reporting is essential to stakeholder decisions in this environment. The need for proper disclosure of financial condition is critical to the survival of the relevant
That the economic fallout of the COVID-19 pandemic is disrupting business is undisputed. Companies in certain industries, such as travel and dining, are seeing drastic effects on financial results. For example, United Airlines reported that it expected daily revenues to be $100 million lower in March 2020 than March 2019. Similarly, the parent company of Chuck E. Cheese reported a 21.9% decline in same-stores sales in Q1 2020 versus Q1 2019, which it attributes to the closure of “on-premise dining, entertainment, and arcade rooms.”
A financial accounting report reflects the assumption that the business entity will continue as a going concern until it is liquidated. An asset liquidation generally has a negative effect on all stakeholders, including investors, creditors,
Now more than ever, there is heightened scrutiny around the ability of business entities to continue as a going concern. Under the GAAP standard, what must be assessed is the going concern of the business.
Businesses are being challenged like never before to either adapt or perish. CPA advisors, auditors, managers, and other stakeholders should expect to see increases in going concern disclosures, as well as in explanatory and emphasis-of-matter paragraphs in audit opinions regarding going concern issues. CPAs are well positioned to advise their clients during this time and provide higher quality information to stakeholders that use that information for vital business decisions.
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