Accounting and Reporting in Times of Economic Uncertainty
Accounting and reporting in times of economic uncertainty can be complex. Make sure you get it right using BDO's publication.
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Economic uncertainty can arise whenever unexpected events disrupt the status quo. For example, it can arise when valuations of specific asset classes become over-inflated or when natural disasters (such as hurricanes, floods, earthquakes, and forest fires) cause widespread damage, particularly to economically important regions or industries. It can arise from geopolitical tensions, wars, terrorism, international sanctions, and changes in trade policy, tariffs, and regulatory agendas. Economic uncertainty can also arise when costs rise more quickly than expected (for example, due to labor shortages during the COVID-19 pandemic or whenever there is a sudden change in oil and gas prices). These events and others can trigger stock market volatility, which can cause changes in consumer behavior, triggering even more volatility. Often, such events tend to compound, as businesses not directly affected by an event are affected by secondary and tertiary effects.
This publication discusses key accounting, SEC reporting, and auditing considerations with respect to economic uncertainty, including the following:
- Revenue recognition
- Fair value measurements
- Impairment of indefinite-lived assets, long-lived assets, and goodwill
- Income tax accounting
- Disclosures about subsequent events and risks and uncertainties
- Going concern assessments
- SEC reporting considerations (for example, with respect to the description of the business, risk factors, MD&A and quantitative and qualitative disclosures about market risks, and items that might trigger reporting on Form 8-K)
- Non-GAAP measures
- Internal controls over financial reporting
- Auditing considerations (including the effects on the risk assessment process, obtaining sufficient appropriate audit evidence and the audit report)
- Corporate governance and shareholder considerations
Download our publication for more guidance on these topics.