FAR And Covid-19 Impact

Reading Time: 2 minutes
far_and_covid_19_impact

FAR Subsequent Events – Covid-19 Impact

American companies published their fiscal 2019 annual report earlier this year. On a review of the 2019 annual report** of Home Depot, we found a COVID-19 disclosure on page 21 as below:

“The recent outbreak of the novel coronavirus COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the U.S. and global economies and created uncertainty regarding potential impacts to our supply chain, operations, and customer demand. The pandemic has impacted and could further impact our operations and the operations of our suppliers and vendors as a result of quarantines, facility closures, and travel and logistics restrictions. As a result of COVID-19, we have reduced store operating hours, expanded our paid time off policy for associates, and shifted certain store support operations to remote or virtual, and we may face additional labor-related costs. We are also taking steps in our stores to manage foot traffic to better protect our customers and associates. In addition, in certain jurisdictions, we have had to cease sales of or delay commencement of work on certain services deemed “non-life-sustaining.” **

According to Accounting Standards Codification  (ASC -855), companies are obligated to let the public/investors know about events subsequent to the balance sheet that can have an impact on the business. If the condition relating to subsequent events existed on the balance sheet date, such event is recognized and disclosed in the financial statements and if such condition did not exist on the balance sheet date, it is only required to be disclosed.  In the case of Home Depot even though COVID-19 was existing in 2019, WHO declared it as a pandemic only in early March 2020.  Therefore, the pandemic of COVID-19 was disclosed in the notes to the 2019 financial statements as a subsequent event that can have an adverse impact on its financials in subsequent periods.
Sources: ** Home Depot (https://ir.homedepot.com/~/media/Files/H/HomeDepot-IR/2020/2019_THD_AnnualReport_vf.pdf )

Leave a Comment

Your email address will not be published. Required fields are marked *

Featured Blogs

Leave a Comment

Your email address will not be published. Required fields are marked *

Featured Post

Banking in the Cloud

Banking in the...

Banking in the Cloud – What’s there for Accountants? Cloud...

22 Jul 21

Read more

4 Ways FinTech Firms are Preventing and Detecting Financial Frauds

4 Ways FinTech...

The FinTech sector has seen unprecedented growth over the last...

15 Jul 21

Read more

CPA Exam Tips: To-Dos For ‘The’ Month Before D-Day

CPA Exam Tips:...

The exam is knocking at the door, Prometric dates will...

8 Jul 21

Read more

a global perspective on the automation revolution

Is the Very...

In business - as in life - change is the...

29 Jun 21

Read more

5 challenges CPA face

5 Challenges CPAs...

The accounting field has undergone some radical changes over the...

23 Jun 21

Read more

6 Easy Ways to Navigate Essay Questions for the CMA Exams

6 Easy Ways...

Essay types are not amongst the ones that should keep...

14 Jun 21

Read more

US CPA certification can get you the CPA Canada designation

US CPA certification...

Yes, you heard it right! If you hold a US...

11 Jun 21

Read more

Cryptocurrencies are Reaching New Heights, so are Accounting Issues

Cryptocurrencies are Reaching...

Is bitcoin buzz an event-driven motif? Are the arguments about...

18 May 21

Read more

Bias in artificial intelligence

Um, come again?...

Machine Learning, a subset of artificial intelligence, responds to the...

4 May 21

Read more

CX Journey

How an effective...

How many of you are familiar with the ‘making of...

19 Apr 21

Read more