The coronavirus outbreak is affecting businesses around the world and forcing entities to carefully examine how the situation might affect their financial reporting. This IRFS Alert looks at the impact of the coronavirus for the year ended on December 31, 2019.

Is the coronavirus crisis considered a post-reporting period event (also known as an adjusting event) for the year ended on December 31, 2019?

  • Entities should review IAS 10 – Events after the Reporting Period to determine whether or not the coronavirus crisis is an adjusting event.
  • We believe COVID-19 surfaced and spread in 2020 and that there is insufficient evidence that it existed at the end of the reporting period on December 31, 2019. This therefore makes the outbreak a non-adjusting event.
  • Entities should ensure that the valuation of their assets and liabilities as at December 31, 2019 is not affected by the coronavirus crisis, which occurred subsequently.

Disclosure

Entities must disclose if a non-adjusting event has had a significant impact on their financial statements. Any such disclosure must include the nature of the event and either an estimate of its financial impact or an indication that the impact cannot be estimated.

Do you have questions about the coronavirus’ impact on financial reporting?
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When an unexpected event like the COVID-19 crisis disrupts your operations and threatens your business’ financial health, you need a clear understanding of your financial situation so that you can make timely decisions.

Now more than ever, you need to optimize each of your business’ key processes and procedures.

This involves assessing the company’s short-term situation and reviewing its treasury management. Specifically, you want to optimize your cash flow, financial risk, funding sources and working capital, while looking to defer certain payments or negotiate instalment payments.

Here are three recommendations for effective cash management in a crisis situation.

1. Evaluate your current situation and financial health

  • Analyze your working capital

These are, of course, accounts receivable, accounts payable, cash assets and credit facilities.

Resist the temptation to be overly optimistic. For example, don’t count on funds from clients whose account is already in arrears. If they weren’t able to pay you before the crisis, it’s unlikely they will now.

  • Make sure you have a clear understanding of your credit facilities, guarantees and margins

For example, do you have equity available to obtain additional financing or margin coverage?

Identify your priority debts and repayment concerns

You might need to negotiate new repayment terms. Government authorities are likely to be accommodating in light of the current situation.

2. Create short and long-term plans for your cash flows under different scenarios

  • Calculate past sales and expenses

This will ensure that you understand your operating cycle.

  • Review your sales prospects

Be realistic— or even conservative—in your estimates.

  • Try to quantify the impact on your expenses

Do it to the best of your knowledge and based on your assessments of the current situation.

  • Revise your investment plans

It is important to review your capital investment plans.

  • Analyze your financial structure

Analyze your financial structure and repayment obligations.

Once you have all this information, you can prepare a cash flow budget to give you a better idea of what the next year will look like. Test different scenarios and see what your financial needs are.

3. Develop a cash asset protection strategy

Look for potential financing sources

If you anticipate having cash flow issues, look for potential financing sources. Be proactive and approach financial institutions. Build trust with your financial partners by being transparent. Remember that they will be some of your most important allies.

Learn more about the recently announced government assistance programs

You’ll want to apply as soon as possible to reduce wait times.

Repeat these steps regularly

Things are evolving rapidly right now. Take control by reviewing your treasury management plans.

Technological solutions for a better management

This crisis might have raised performance issues with your management tools. If that’s the case, consider switching to cloud-based treasury and payment management technological solutions to help you weather these turbulent times, and future crises. These reliable tools will boost your credibility and earn you the trust of your clients, partners and suppliers.

Today’s unprecedented situation quickly derailed everyone’s best-laid plans. But if you follow these tips, you should be able to handle whatever the future has in store. We’re here to help you get through it.

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Jean-François Boudreault
Partner | Human resources consulting

In a time of crisis, as is currently the case with COVID-19, keeping staff mobilized can be a challenge. This is especially true if your team members are working remotely, far away from each other.

It is necessary, however, for the employees’ well-being and to ensure smooth operations that everyone’s motivation remains undiminished.

Here are a few recommendations for maintaining a good state of mind at work, even in such a context. Don’t lose sight of the fact that the organization’s main strength is undoubtedly its human capital, its employees.

Adapt to change

Organizations need to react quickly in a time of crisis. They must constantly adjust their strategy as events unfold. Depending on their needs, they have various options, such as teleworking, using technology, optimizing processes, reducing the payroll (temporary layoffs) or hiring temporary employees to compensate for the many absences due to the epidemic.

Of course, all these organizational changes, combined with the disruption of family and social life and the psychological impact of a major crisis, can affect the motivation of your most valuable asset: your employees. It is in these difficult times that the manager’s role takes on its full meaning.

Be flexible

This is when managers must learn how to navigate by sight, gauging the direction of the wind. Depending on the project and circumstances, each worker will need a different approach, requiring the manager to be considerably flexible and use what is known as “situational leadership”.

Some employees will need clear guidelines, specific boundaries and a well-defined framework to compensate for the distance and possible transformation of roles. Others will need to have a sense of their manager’s trust and interest, but will be comfortable with more autonomy.

The context requires a great deal of attentiveness and listening to gauge the staff’s mood and recognize their needs from day to day. Maintaining the team’s morale is paramount, and it becomes even more difficult when all or many of them are at a distance.

Communicate, communicate, communicate

In any event, the worst thing you can do is to stop communicating while waiting for the bad times to pass, keeping employees “out of the loop” and hoping that they’ll be able to weather this storm on their own. Right now, more than ever, your employees need to stay in touch and be kept informed of developments.

Continue to share important information with them on a daily basis through virtual team meetings, summaries, telephone exchanges. Talk to them about goals, issues and current or upcoming changes.

It is essential to adequately inform and reassure employees, to clearly explain the measures that will be taken, the changes that will be made, as well as the consequences and expected results, so that everyone has a clear understanding of their role and what’s expected of them.

Take the time to recognize their efforts and go over the results with them, congratulate them on accomplishments and work together to fine-tune the process, if necessary.

Allow employees to express themselves and find out about everyone’s well-being. Despite the crisis, maintain not only a functional but also a relational connection with your employees.

Maintain harmony and guide the group

Let’s start from the principle that the leader is, in a way, a conductor directing and setting the musicians’ pace. Now think of an orchestra without a conductor (yes, we know that robots can do that now… but can they really bring out the emotion of the symphony?) You can easily imagine how the symphony deteriorates into a cacophony of false notes and lack of rhythm.

Now, transpose the image to an organization, where managers must mobilize their team towards a common goal to ensure harmony. When the situation and economic context are favourable, orchestrating employees is rather easy, everyone knows their role and how they fit into the whole in a fairly predictable environment.

But what happens in times of crisis or a sudden downturn, when, in a very short timeframe, everyone’s expectations and roles have been changed for the sake of profitability, with little time to adjust? Managers must evolve towards a more active role, requiring them to be more involved in operational activities and apply proximity management.

Involve employees in the decision-making process

Lastly, a strategy that ensures greater employee involvement in the search for solutions is particularly important. Employees who are consulted and engaged are employees who feel useful, who have a sense of belonging to a team, a mission, of contributing to something greater than themselves. The end result is the strengthening of employees’ bond with the organization. They will feel involved and motivated to do their utmost to achieve the goal.

The leadership role must evolve towards teamwork that involves employees in order to maintain their motivation and attachment to both their work and the organization. In a context of workforce shortages, our employees’ experience is also critical to their loyalty. No one wants to experience a situation like the coronavirus crisis, but let’s use it to bring the human dimension back into the heart of our businesses.

Do you feel prepared to manage your business in a crisis? Will you be able to adapt your leadership to deal with the fast-paced changes tomorrow will bring? Do you have all the tools and skills you need to exercise effective leadership in this unexpected environment?

20 Mar 2020  |  Written by :

Jean-François Boudreault is a partner at Raymond Chabot Grant Thornton. He is your expert in human...

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Guillaume Caron
Chief Executive Officer VARS - Cybersecurity | Digital and technology consulting

With the advent of COVID-19, phishing, ransomwares and social engineering attacks are on the rise.

Over the past few days, we have observed malicious activities and in the coming weeks, we will see a significant increase in the number of phishing campaigns, ransomware attacks and social engineering (malicious links, fake news, etc.) linked to the COVID-19 crisis. Indeed, malicious actors are already taking advantage of the vulnerability of companies, whose employees find themselves suddenly working from home, some without any cybersecurity controls in place.

Reducing your risks

  • Teleworking increases risk of incidents: employees working from their personal or new unsecured computers could create easy entry points to the organization’s systems.
  • Increase in phishing campaigns: malicious parties are taking advantage of the crisis to create all types of new schemes surrounding coronavirus. Since phishing is often the primary method used by attackers, it is imperative to protect employees’ emails against malwares and social engineering.
  • Exchanging sensitive data: employees are going to rely more on emails to exchange documents and information. Without adequate protection I.e.: encryption, organizations may lose confidentiality and integrity of their data.

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Implementing cybersecurity solutions adapted to your entity’s needs

Your organization can quickly benefit from integrated cybersecurity solutions, in order to minimize the negative impacts of the coronavirus situation.

Furthermore, information security awareness training will be important in the coming days to teach employees best practices while working remotely.

Temporary protection for (3) months

To meet the pressing needs of SMEs facing the current crisis, Raymond Chabot Grant Thornton and VARS are offering a three-month temporary protection that allows you to quickly improve your security posture in the current situation of COVID-19.

The solution requires no annual commitment, no equipment is needed, and installation will be done remotely.

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The managed and integrated solution includes:

  • 24/7 monitoring and advanced protection of your workstations and servers as well as temporary workstations used by remote employees.
  • Sophisticated email security with artificial intelligence to detect malicious URLs and attachments, and block phishing and social engineering, including identity theft, which is growing exponentially.
  • Tools to secure, exchange, and protect sensitive and confidential information with third parties.
  • Information security awareness online training to educate your employees on the risks and good practices, particularly in a teleworking context.
  • Access to a Virtual CISO (Chief information security officer) on demand to provide strategic guidance.

Protect your most valuable assets with the help of our dedicated experts.

Contact our team today.

In addition, if you have been victim of a security incident, we invite you to immediately call the VARS emergency service at 514-949-6876 or 514-941-7829. We can help you now.

18 Mar 2020  |  Written by :

Guillaume Caron is a cybersecurity expert at Raymond Chabot Grant Thornton. Contact him today!

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