Reskilling key for CAs to handle changes in accounting standards

The post-pandemic era should be taken as an opportunity by auditors to make progress on initiatives to allow enhancement of internal audit capabilities, said Dr Maryam Al Suwaidi, acting CEO of Securities & Commodities Authority (SCA) on sidelines of ICAI Dubai Chapter’s recent virtual event focused on the theme ‘How to navigate through Accounting & Auditing issues: Going Concern, Material Uncertainty, Impairment and Debts Restructuring’.

Al Suwaidi said: “Building on the lessons learned from Covid-19, internal audit can play a key role in helping the management to better understand the critical risks in the new normal and provide insights to maintain effective governance and internal control over key business processes. Such initiatives might include refreshing analytics or digital strategies, remote working and conferencing capabilities, developing new analytic methodologies, moving forward with automation pilots, and accelerating planning activities on audits down the road. The UAE government and SCA have been acting as a facilitator in this respect by allowing general meetings of public companies to be conducted remotely and enabling e-voting on resolutions presented during these meetings.”

Sunder Nurani, chairman of The ICAI Dubai Chapter highlighted the importance of reskilling to chartered accountants to keep abreast with the constant updates and changes in the accounting standards and various regulatory requirements.

Nurani also reminded — 300 members of the chapter, who attended the event — about the importance of good corporate governance, robust internal audit which are essential for the corporates to sustain for a foreseeable future as highlighted by Al Suwaidi. He also highlighted the importance of embracing sustainability by the finance professionals. Environmental, Social & Governance (ESG) information reporting which is included as part of Integrated reporting is compulsory for the listed companies in the UAE and such companies need to prepare and publish a Sustainability Report in compliance with the Global Reporting Initiative (GRI) as well as the sustainability standards and requirements issued by the markets within 6 months after their fiscal year end.

CA (Dr) Sanjeev Singhal, Central Council Member of ICAI deliberated on the need for taking a prudent approach in while assessing going concern in the times of uncertainty. he highlighted that uncertainty in the economic environment and volatility due to covid-19 has triggered the need for impairment testing. Disclosures are not sufficient companies are required to test for impairment red flags for impairment and there is low headroom in adversely impacted industries and those which have a weak operational or financial position. the evaluation criteria of going concern may vary depending upon the industry extent and timeline of impact significant to low or which could be given positive in some cases example in the healthcare it could have a positive impact. Going concern evaluation in these turbulent times would require significant levels of stress testing and working out multiple scenarios. the auditors and accountants have enormous responsibility in these testing times.

M.P. Vijay Kumar – CFO SIFY and Central Council Member of ICAI mentioned that all investments in PPE and IA are based on expected future cash generation. With extended pandemic, most enterprises are likely to have situation where the cash generation is likely to be lower than plan, with the problem becoming more acute with uncertainty of future.

The assets are predominantly funded by debt from banks who deploy hard earned savings of the public and from equity contributors, who have contributed high risk capital. It is hence imperative, that financial reporting should communicate the reduction in recoverability of an asset, referred as impairment, so that all stakeholders are able to take informed decisions.

Harikishan Rankawat, Secretary of The ICAI Dubai Chapter mentioned at the time of starting the event that we all are currently going through the rapid outbreak of the Covid-19 and this is the first and foremost a public health emergency and our thoughts remain with those people, who got impacted. As the disruption and implications for Covid-19 impact us all personally, we are also seeing significant challenges for businesses as well at the same time. — business@khaleejtimes.com