Question

The outbreak of COVID-19 has negative as well as positive repercussions on the design of accounting information systems. Discuss.  

Answer 1

Answer: The COVID-19 pandemic crisis and its effects in an economy mean that stakeholders and other investors require the high-quality financial information more than ever. The outbreak of COVID-19 requires management to make an efficient design of accounting information systems. Few organisations may first report financial impacts in interim financial statements (as per IAS 34 - Interim Financial Reporting), that involve more usage of estimation in accounting. But the information should be reliable and include all material financial information relevant for a proper understanding of the financial performance or position of an organisation must be appropriately disclosed. Companies are required to continually update and review the assessments up to the date the financial statements are issued given the fluid nature of the COVID-19 and the involved uncertainties. The design of accounting information systems for the reporting periods ending on or before 31 December 2019, there should be consensus in a general way that the impacts of the outbreak of COVID-19 are the result of events that arose after the reporting date. For later reporting dates it includes the current-period event that needs an ongoing evaluation to know the extent to which developments after the reporting date should be recognized in the reporting period. However the negative repercussion is the differences in approach depending on whether financial statements are prepared with the usage of the national GAAP or IFRS.