The Australian Institute of Company Directors (AICD), Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia published guidance on the disclosure and reporting of the impact of Covid-19 on businesses earlier this week.
The joint report, called the Impacts of COVID-19 on annual report disclosures, was created to assist listed and unlisted companies, not-for-profits, charities and small to medium businesses.
“Australian directors are facing their toughest financial reporting season in decades,” AICD CEO Angus Armour said. “Investors and stakeholders are seeking clarity, while directors are grappling with the uncertainty created by global recession and pandemic. There has never been a more challenging period in our modern reporting environment given the level of disclosure that is now required and expected, and the consequences if you get it wrong.”
According to the report, while public companies have an obligation to disclose all material information where reasonable, the week to week volatility seen in markets makes it difficult to know what information requires disclosure.
“Forward-looking disclosures will be particularly difficult,” Armour said.
In recent months many businesses have decided against making any forward-looking disclosures, instead leaving shareholders in the dark about possible full-year result expectations.
ASIC chair James Shipton welcomed the report, stating that while businesses may be facing uncertainty about future economic conditions the securities watchdog would continue monitoring disclosure to ensure it is meaningful, useful and timely to shareholders.
“In the current environment, the quality of financial reports and related disclosures is more important than ever for confident and informed markets and investors,” Shipton said. “Investors expect clear disclosure about the impacts on an entity’s businesses, any risks and uncertainties, key assumptions, management strategies and future prospects.”