In recent remarks, the Chief Accountant noted that the Securities and Exchange Commission’s Office of the Chief Accountant (OCA) and other divisions within the SEC are monitoring the issues raised by COVID-19.
He emphasized the importance of reliable financial information, which provides transparency for investors, and noted that the Office has actively engaged with the Financial Accounting Standards Board (FASB) and others in order to address the impacts of the virus.
The Chief Accountant also noted that companies will be required to make significant judgments and estimates in connection with financial reporting as a result of the virus. In particular, he identified a number of areas that may involve judgments and estimates including:
- Fair value and impairment considerations;
- Debt modifications or restructurings;
- Revenue recognition;
- Income taxes;
- Going concern;
- Subsequent events; and
- Adoption of new accounting standards (e.g., the new credit losses standard).
While noting that estimates and judgments are to be anticipated relating to these and other areas, the Chief Accountant noted the importance of required disclosures relating to judgments and estimates in these and other areas.
Finally, the Chief Accountant also discussed the OCA’s work with the PCAOB as well as with international accounting standard setting and other international organizations. See the full text of the remarks here.