DISCLOSURE OF IMPACT OF COVID-19 PANDEMIC ON FINANCIAL STATEMENTS OD COMPANIES
SECP vide Circular No. 26 of 2020 dated August 31, 2020 requiring Companies to make disclosure under separate note titled “Impact of Covid-19 on the Financial Statements” in first set of Annual or Interim Financial Statements issued after August 31, 2020.
The reason to make disclosure about impact of Covid-19 is to ensure that investors, potential investors, lenders, and other stakeholders have the required information to make rational decisions.
Specific disclosures required to be made in separate note titled “Impact of Covid-19 on the Financial Statements” are as follows: –
- The financial impact of COVID-19 on the carrying amounts of assets and liabilities or items of income and expenses, as required under the relevant accounting and reporting standards.
This note would be in addition to the information required to be disclosed in the financial statements under the relevant accounting and reporting standards as applicable in Pakistan.
- In cases, where there is going concern uncertainty due to COVID-19, the specific disclosure shall also provide information about management actions and plans to mitigate/handle the adverse financial implications and operational changes.
- In cases, where management has evaluated and concluded that there are no material implications of COVID-19 that require specific disclosure in the financial statements, this fact should be disclosed.
- The specific disclosure in the financial statements on impacts of COVID-19 would be subject to the materiality considerations in the context of IAS 1, ‘Presentation of Financial Statements’.
This Circular is applicable with immediate effect.