Question

Question 1
The accounting information systems designed and installed in organizations are exposed not only to risks that emanate from users such as fraud, terrorisms, theft and other intentional acts for which control measures must be installed to check and minimize these risks, but also risks that emanate from natural disasters such as widespread flood, earthquake, fire, hurricanes, pandemic outbreak etc. which in most cases are uncontrollable or prevented. In this regard, organizations must have a disaster recovery plan (contingency plan) in place so that the full impact of a naturally occurring disaster can be absorbed to ensure business continuity.
a) Explain how the outbreak of the COVID-19 pandemic impacts on the accounting information system as a natural disaster and the strategies businesses can adopt to maintain current business operations.                                                                                                                              
b) Discuss the contingency plans that must be in place before, during and after the outbreak of COVID-19 so that businesses can fully absorbed the pandemic to ensure business continuity.                                                                     
Question 2                                                                                                                  
The outbreak of COVID-19 has negative as well as positive repercussions on the design of accounting information systems. Discuss.                                                         

Answer 1

1) The outbreak of the COVID-19 have caused a tough time for the companies on accounting information system. Several aspects such as assessing impairments, or revenue computation, or recognising deferred tax assets, would become difficult during these times. Due to Coronavirus outbreak, it is evident that most of the businesses demand and supply has affected and this area should be thoroughly assessed to determine the impairment. The events such as cash generating units or inventory obsolescence whose market value has decreased is an indicator of impairment. Cash flow issues have an impact on the submission of statutory dues such as Employee Provident Fund, Provident Fund, and Goods and Services Tax; and it may result to an adverse opinion in their audit report by auditors. The fair value measurement will be a challenge for the companies. Moreover due to outbreak of the COVID-19 any materially affected business can give a justification on the decline in profitability with an additional presentation of line items. However the problem would be while quantification assessment, for the companies to justify the rationale and for auditor to provide a certification for the same
To deal with this situation the businesses can take an extension of time limit provided by regulators in regard to financial results, GST return, submission of corporate governance report, etc. It would be helpful in resolving the concerns to a certain extent, but a relief in terms of time extension must also be provided to banks, financial institutions, NBFCs for non-performing assets assessment, and as a result the lenders and companies would get some relief in facing the liquidity crises

2) In response to COVID-19, the businesses must develop their contingency plans quickly. Before the outbreak of COVID-19 every team member from top executive down to the bottom level should know who is doing what. They must ensure the back-up arrangements in case employees responsible for safety and health are not in a position to perform their roles. During the outbreak of COVID-19 business must ensure the employee safety and comfort. The employees should be provided as much flexibility as possible to complete their work tasks. It is not a time for self-promotion for an entity; and any appearance of trying to take financial gain can damage the brand reputation forever. Business can create a positive impact on society and entity's bottom lines with the creation of corporate social innovation strategies. In a post-COVID world (after the outbreak of COVID-19) the CSR will be repaid in increased loyalty, a lasting reputational gain and higher productivity for many years to come and ensure business continuity.