FRC unveils new guidance on financial reporting

By Collins Nweze

The Financial Reporting Council (FRC) of Nigeria yesterday released new guidance on the impact of COVID-19 on financial reporting. This is the second of such guidance to be released by the Council in over two weeks.

In a statement posted on its website, the council explained that while the first guidance targets auditors of financial statements in Nigeria, the latest one targets preparers of financial statements during COVID-19 period.

FRC statutory responsibilities include ensuring accuracy and reliability of financial reports and corporate disclosures, maintaining a register of professional accountants and other professionals engaged in the financial reporting process, and advising the Federal Government on matters relating to accounting and financial reporting standards in Nigeria.

It said the purpose of the guidance is 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 impacts of COVID-19 on their businesses with the consequent financial reporting implications which they are expected to give attention to, all within the framework of existing body of standards International Financial Reporting Standards (IFRS).

Some of the specific issues addressed in the guidance include “events after the reporting period, going concern, effects on interim financial reporting, changes in expected credit losses for loans and other financial assets, net realizable of inventories, group reporting, effects of government and regulatory relief programmes on entities and their customers and transparency and disclosures”.

The guidance for preparers of financial statements during COVID-19 period can be accessed via the FRC website: www.financialreportingcouncil.gov.ng. The guidance stresses “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 reminds preparers that they are 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 are 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.