COVID-19 may impact a company’s projected cash flows due to a decrease in demand for its product, supply chain disruptions, or other events. In such situations, a company needs to consider whether the disruption in its business indicates that a “triggering event” has occurred. On account of these events, an impairment assessment is warranted and the assumptions and cash flow forecasts used to test for impairment should be updated to reflect the potential impact of COVID-19. Budgets, forecasts, and other assumptions should reflect the increased risk and uncertainty.
For the purpose of Statutory Audit of FY 2019-2020 and Q1 ending June 2020, Companies are required to provide relevant documentation and records pertaining to assessment of Impairment, and in case any non- compliance is identified, the Audit Report (Standalone and Consolidated) may contain relevant disclosure in this regard.
For further details, please refer the attached document: Impairment of Assets & Financial Assets
The information contained herein is in summary form based on Accounting Standards/ Indian accounting standards prescribed under Companies Act, 2013 and is further based on information available in public domain. While the information is believed to be accurate to the best of our knowledge, we do not make any representations or warranties, express or implied, as to the accuracy or completeness of this information. Recipients should conduct and rely upon their own examination and analysis and are advised to seek their own professional advice. This note is not an offer, invitation, advice or solicitation of any kind. We accept no responsibility for any errors it may contain, whether caused by negligence or otherwise or for any loss, howsoever caused or sustained, by the person who relies upon it.