Question

Describe with examples 6 (SIX) controls that an organizations can utilize to fortify their accounting systems during a crisis such as Covid-19

Answer 1

1. Put employee well-being above all else

Your people are your greatest asset. In times of a crisis, organizations have the responsibility to act in the best interests of their people — and their customers and other stakeholders. It’s also best for business in times like these when acquiring, managing and retaining talent while controlling cost becomes tougher than ever before. This will require companies to be adaptable to rapid change.

Companies will have to identify alternative working arrangements and reimagine business-as-usual while also complying with local labor laws in a way that puts first the health and safety of employees. Complement these efforts with relevant and timely communications, and employee support programs.

2. Communicate – promptly, clearly and transparently

The best lines of communication are the most open. Clear, prompt and transparent communications are essentials in all business scenarios. In crisis scenarios, it is even more so, especially if you need to secure ongoing support from customers, employees, suppliers, investors and regulatory authorities. Companies will want to keep customers apprised of any impact to product or service delivery. If contractual obligations cannot be met as a result of supplier or production disruption, be prompt to negotiate. Proactive communication and actions will help mitigate punitive damages, liabilities associated with disrupted customer obligations and damage to brand reputation.

3. Keep expenses in check and have backups for budget deficits

Determine how the crisis affects budgets and business plans. Stress-test financial plans for multiple scenarios to understand the potential impact on financial performance and assess how long the impact may continue. If the impact is material and former budget assumptions and business plans are no longer relevant, remain agile and revise them. Where the business is significantly impacted, consider minimum operating requirements, including key dependencies of workforce, vendors, location and technology.

If required, look at near-term capital raising, debt refinancing or additional credit support from banks or investors, or policy support from the government. At the same time, review overall operating costs and consider slowing down or curtailing all nonessential expenses.

4. Identify and repair broken links in the supply chain

Most companies are likely to experience significant disruption to their operations and will underperform throughout the duration of the COVID-19 crisis. Companies that are operating in or exposed to countries that are significantly affected by COVID-19 will experience disruption to their supply chain and production commitments.

When working with broken supply chains, companies need to maintain regular contact with suppliers regarding their capability to deliver goods and services, and work out recovery plans. When required,