Accounting impacts of the Covid-19 under French GAAP
The unprecedented health crisis linked to the global Covid-19 epidemic is affecting international economic and commercial activities and has resulted in significant impacts for all entities, all industries and geographies.
Accounting consequences under French GAAP
1. Entities closing their financial statements as of December 31st, 2019
The epidemic and its consequences are post-closing events that are not likely to adjust the accounts closed on December 31st, 2019.
Indeed, given the existing elements as of December 31st, 2019, in this case the low spread of the virus and the lack of global alert by the World Health Organization (WHO) on that date, it is considered that the known information on December 31st, 2019 are items of the 2020 period that do not allow for adjustment of the amounts recorded at December 31st, 2019.
As the Covid-19 outbreak is not related to a situation that exists as of December 31st, 2019, the amounts recorded at December 31st, 2019 are not adjusted.
As the Covid-19 outbreak is a significant post-December 31, 2019 event, information is provided in the notes to the financial statements.
The information must be clear and specific to the entity, it must include the nature of the event as well as an estimate of its impact on the accounts.
The information may cover the impact of the health, economic and financial crisis linked to the Covid-19 epidemic after December 31st, 2019 and up to the date of the relevant body's decision, the book value of the assets on the December 31st, 2019, depending on the specificity of each entity and their significant nature.
When management is aware, during the period between the close of December 31st, 2019 and the date of the decision by the competent body, of significant uncertainties related to events or circumstances after closing that may cast significant doubt on the entity's ability to continue operating, the entity must provide information in the notes
When it appears, during the period after the close of December 31st, 2019 and until the date of the decision by the competent body, that the going concern is permanently compromised, the accounts prepared on December 31st,2019 are not changed for this conclusion but information must be given in the notes.
This information in the notes could present the nature of the event as well as, for example, simplified accounts established under a new accounting agreement that would apply in 2020 (e.g. in net asset values).
It should be remembered that post-closing events should also be set out in the management report.
With regard to the events that have occurred and the known elements after the date of the decree of the accounts relating to the effects of the crisis related to Covid-19, they will have to be communicated to the deliberative body called upon to approve the financial statements.
For more information, refer to the FAQ published by the CNCC and CSOEC on the consequences of the health and economic crisis linked to the Covid-19 epidemic on accounting, audit and legal aspects:
2. Entities which are closing their financial statements after December 31, 2019
Entities closing their financial statements from January 2020 will have to consider the consequences of this epidemic as part of the closing.
These include closing after January 30th, when WHO declared a status of health emergency.
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