New guide to help NFPs report on the impacts of COVID-19
17 July 2020 at 4:51 pm
Experts say not for profits and charities have unique factors they need to consider when assessing the impact of the pandemic
Amid the uncertainty and chaos of COVID-19, a new guide has been released looking at the key questions charities and not for profits should be asking ahead of reporting season.
The Australian Institute of Company Directors (AICD), Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia have jointly published the report, which recognises the unique challenges posed to organisations when describing the impact of COVID-19 in annual reports.
AICD’s CEO and managing director, Angus Armour, said Australian directors were facing their toughest financial reporting season in decades.
He said there remained a fundamental obligation for companies to disclose all material information to the market when they were able to.
“The week to week volatility we are experiencing in how we work and live, never mind the markets, means directors will be required to make fine judgment calls on this information. This guide assists companies who are making those disclosures grapple with that difficult task.”
Armour told Pro Bono News the guide was especially useful for charities and NFPs.
“The guide specifically looks at the questions NFP and charities should be asking ahead of reporting season,” he said.
“NFPs and charities have factors they need to consider that commercial entities do not when assessing the impact of COVID-19, for example any impacts on their ability to conduct face-to-face fundraising.
“The guide includes suggested questions that a director, responsible person or office holder of an NFP or charity might ask management around assessing those impacts.”
He said the report would also be useful for the many NFPs and charities that might be concerned around their assessment of going concern (whether an organsiation can make enough money to stay afloat).
“The guide provides a case study of a hypothetical charity having to make that assessment, including making assumptions about its future operations and determining whether those assumptions are material,” he said.
The report notes that charities are not only dealing with fundraising issues, but also a drop in corporate or individual donations, reduced volunteer activities, and problems completing government-funded projects.
It said when assessing the impacts of COVID, organisations will need to form a view on the different ways in which the pandemic could develop, including its transmission and its effect on the community at large going forward.
Organisations have also been urged to consider providing in their reports details of any scenario modelling they have performed on COVID impacts.
CPA Australia CEO Andrew Hunter said he knew entities and auditors would be dealing with difficult issues around solvency, going concern and in areas like asset impairment.
“This guide does not seek to replace the material issued by the regulators and standard setters but instead is a roadmap to help navigate their guidance and FAQs. It will be a handy resource as they approach these issues,” Hunter said.