ASPE-ASNFPO – COVID-19: Accounting Implications for Years Ended On or After March 31, 2020

The novel coronavirus (COVID-19) pandemic continues to have a significant impact on our economy, including consumption, production and supply chain disruptions. Despite encouraging signs, the business environment remains highly uncertain. Entities need to carefully consider the accounting implications resulting from this still uncertain situation.

This edition of Flash presents accounting implications and identifies key financial reporting areas that entities should consider when determining the potential impact of the COVID-19 pandemic on their business and, on the results, financial position and disclosures in their financial statements prepared in accordance with accounting standards for private enterprises (ASPE) or accounting standards for not-for-profit organizations (ASNFPO). It also discusses the recent decision of the Accounting Standards Board of Canada (AcSB) to defer the effective dates of several amendments to standards in light of the COVID-19 pandemic.

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Bad communication management—both internal and external—can directly affect your reputation and your company’s survival.

Since the start of the COVID-19 crisis, most Quebec SMEs have made it a priority to ensure they have enough liquidity to continue their business activities once government restrictions are lifted.

However, companies must have a sound communication plan in place to dust themselves off and restore or maintain their reputation with their stakeholders in the wake of a crisis. A business’ survival, and its employer brand, hinges on an effective communication plan.

Choose action over reaction

You’ve worked hard to grow your business. Now, more than ever, it’s imperative to ensure that your efforts are not undone by elements that could negatively impact your business reputation.

A good communication plan will keep you on track. Take action to protect your reputation and anticipate potential negative impacts. That way, you’ll be in better control of the messages you want to put out and help you restore your corporate image.

Your communication plan should take into account all of the parties involved in any way whatsoever with your business: employees, stakeholders, suppliers, clients, partners.

Each and every one of them has different expectations and needs. So, you should factor that into your communication plan. But first, here are some important things to know to ensure an effective rollout.

How to draft a communication plan

1. Review what you’ve done so far

Take a moment to review how far your business has come since the months prior to the crisis.

  • Did your company’s reputation suffer from the impacts of the crisis?
  • Is your relationship with your employees fragile?
  • Are there any risks of a decline in clientele?

Take the time to ponder the consequences—positive and negative—the crisis may have had on your organization.

2. Set your goals

Set your communication goals, taking into account the observations you’ve made.

3. Prepare your messages

Identify the messages you want to share with each stakeholder based on the goals you’ve set.

4. Develop your communication strategy

Develop a communication strategy to disseminate your messages to your target audiences.

5. Create your content

Prepare content that’s adapted to your target audiences.

6. Roll out your communications

Consider the changing post-crisis context when choosing your communication methods and channels.

7. Follow up

Track your communication results daily and weekly and make changes, as needed.

The contingency plan: an important asset

While we can’t predict the environment Quebec and the rest of the world will be seeing in the next months, you can still gather the tools your business needs to face all kinds of scenarios.

That’s why your communication plan should include a contingency plan that will outline different scenarios for different potential situations. It will help you figure out what you need to do in each scenario.

A contingency plan will allow you to be in control of the situation in the event of an emergency and to minimize potential negative consequences.

Responsible corporate citizens

A business’ contribution to society is particularly significant during and after a crisis. Over the past few weeks, organizations have donated masks to the authorities. Essential businesses have put measures in place to protect their employees and some businesses have offered coffee, food or gas discounts to those working in emergency and healthcare services. A number of initiatives have come out during this crisis.

Those initiatives cost money but they truly highlight how important it is for businesses to act as responsible corporate citizens and to contribute to the well-being of the community. Every little gesture can greatly influence an organization’s image and reputation and, ultimately, your employer brand. So, businesses should continue to contribute to society and make sure that this is an integral component of their communication plan.

We want to ensure you’re able to resume and continue your business activities; that’s why our team of experts has launched Solutions for SMEs. Let us put our vast experience to work for you and help you develop an effective, personalized communication strategy.

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In the coming weeks and months, CFOs will be called on to play a key role in ensuring their organization’s recovery and continued operations.

Before the pandemic, the overall objective of finance teams was to transition to a position as strategic partner where transaction processing would be automated to reduce the time spent on lower-value activities.

In due course, they would be dividing their time collaborating on the entity’s strategic initiatives (e.g., assessing growth prospects), supporting decision-making through business intelligence and strengthening oversight and governance mechanisms.

How to manage liquid assets effectively

The financial flow pattern has changed dramatically in all organizations as a result of the pandemic. This paradigm shift requires CFOs to play a major role in the business’s continuity, including managing liquidities. In the medium term, they must ensure that the organizational structure and technology deployed make it possible to maintain and optimize cash resources.

However, there are a number of issues that limit how efficiently finance teams are able to manage cash resources. Some of these include:

  • the difficulty in easily obtaining an overview of all bank balances;
  • the partial accessibility of funds;
  • issues related to the preparation of cash flow forecasts over different periods;
  • the challenges of preparing multiple versions of cash flows;
  • inefficiencies in producing management reports.

The current pandemic environment is expected to result in further centralization and integration of treasury and finance activities in order to better manage and optimize liquidity.

The treasury system as an interface

Thanks to changes in the technological environment, previously decentralized processes will be combined and then optimized through integrated solutions such as the consolidation of bank accounts, payments and collections and working capital management.

Ultimately, the treasury system will serve as an interface between banking platforms, market data, accounting and all other systems, providing a comprehensive view of treasury activities, including cash resources.

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CFOs will be major contributors in the implementation of all of these technologies, as well as in the organization’s overall innovation process.

This will require the ability to analyze and plan quickly, to act while keeping an eye on changes in the ecosystem, and to keep a watchful eye on the market and the measures in place. This function will require considerable agility and resiliency. Learning, unlearning and relearning, will be vital in a world that has been transformed and will continue to change.

Above all, because of and, perhaps, despite this exceptional situation, CFOs will be able to strengthen their position as a strategic player within their organization.

They will ensure the resumption and optimization of operations through the use of available and affordable technologies. They will contribute to adjusting the business model, optimizing cash management and searching for financing and strategic partnerships. They will provide advice on investments in the organization’s main sectors and ensure that they have a significant role in governance, particularly in terms of risk management and cybersecurity.

With its key role in the recovery, the finance function’s transformation will be accelerated, potentially providing it with an unprecedented position within the organization.

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Many companies will welcome temporary foreign workers (TFWs) for the summer but the current situation requires additional measures.

The pandemic has added a new layer of complexity to many rules and regulations—including those surrounding air transportation and immigration—and resulted in a number of changes. That’s why you need to invest time and energy into preparing for the arrival of your temporary foreign workers.

Here’s how to ensure your foreign workers land smoothly in Canada:

1. Do your foreign workers have all the travel documents they need?

The Government of Canada has established certain restrictions on who can enter the country right now. Foreign workers will only be admitted if they are coming to perform essential work.

To ensure that your workers are let into the country, make sure they arrive at the airport with a valid work permit or the Letter of Introduction issued by Immigration, Refugees and Citizenship Canada (IRCC) indicating that their request has been approved. They will also be asked for this document prior to boarding.

It’s also a good idea to provide your inbound workers with proof of employment that they can present upon arrival in Canada.

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2. Do your workers have a mask, which is essential for travelling to Canada?

Since April 20, 2020, passengers on flights to and from Canada have been required to wear a mask. Since travellers without a mask won’t be allowed to board their flight, it’s important to inform your workers of this requirement before they leave home.

Non-medical and homemade masks are permitted, as long as they meet government requirements. Consult this document for more information.

3. Have you implemented an isolation plan?

All travellers arriving from abroad must complete 14 days of self-isolation. Employers are responsible for creating self-isolation plans for their TFWs.

The plan should state how the foreign workers will be transported from the airport to their isolation location and how they will obtain essential items such as food, medication and personal hygiene products during the isolation period.

Employers should provide a copy of the detailed self-isolation plan to workers prior to departure, since they will be asked to show it at the port of entry. This is doubly important for workers who don’t speak English or French, as they won’t be able to explain the plan to border agents.

By following the advice listed above, you’ll make sure your workers get here on time, without issues at the border.