Effects of COVID-19 pandemic on accounting and financial reportin

Following this WHO declaration, the Coronavirus Preparedness Group was constituted on January 31 in Nigeria, a country WHO categorized as one of the high-risk African countries with respect to the spread of COVID-19. Nigeria is also among the vulnerable African nations, given the weak state of the healthcare system [1]. Indicator reliability indicates the amount of indicator variance that is explained by the latent variable. If the factor loadings value is between 0.4 and 0.7 and supports to an increase in CR and AVE, it should be removed from the construct (Hair, 2014). Statistical Package for Social Science and SMART PLS 3.0 have been used in the study for analyzing data and test the hypothetical relationships described above. As the pandemic and what comes after continues to transform the accounting profession, CPAs need a new mindset, skill set, and tool set to thrive, says Tom Hood, executive vice president of the Association of International Certified Professional Accountants (AICPA).

Afterwards, we focus on the industry type and its concentration as the possible drivers behind the cross-sectional variation in the difference in financial performance between family and nonfamily firms operating in different industrial sectors. Finally, the differences between Anglo-Saxon countries, European countries, Asian countries, and other countries are explored to capture possible geographical variations. Following a recent study on family business sector-related determinants (De Massis et al., 2017; Khlystova et al., 2022), we classified all industries in our sample into industrial and non-industrial sectors. After re-estimating our main explanatory model using the two subsamples, we find that family-owned and managed firms have outperformed financially nonfamily firms in both industrial and non-industrial sectors (see Tables 11 and 12). However, family-managed firms were able to better respond to the COVID-19 pandemic only in non-industrial sectors (see Table 12).

Purposes of Study

Joshi, P. (2020), “Covid-19 pandemic and financial reporting issues and challenges”, International Journal of Auditing and Accounting Studies, Vol. Hood recently spoke with the Thomson Reuters Institute about the future of the accounting profession in the post-pandemic era — a theme he addressed in a presentation at AICPA’s recent 2021 ENGAGE conference and in a whitepaper and course from the Business Learning Institute. Employee illnesses and office closures may lead to the breakdown of internal controls. According to a Deloitte financial reporting alert, management may need to implement alternative controls if the controls that are in place are not effective. COVID-19 thrust accounting firms into the world of tech—and there’s no going back. Existing firms should take this opportunity to overhaul their technology as they look at becoming smarter and digital-first practices, for the benefit of their staff, clients and bottom line.

One important lesson we’ve learned in 2020, is that flexibility can be an asset. From more permanent work-from-home opportunities to shifting away from the typical nine-to-five, https://www.bookstime.com/blog/pandemic-and-accounting-industry companies have found benefit in giving employees more leeway with their schedules. This is another trend that started pre-pandemic and was greatly accelerated in the last year.

Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-

We also find that only small descendants-led family firms were able to outperform financially nonfamily firms during the pandemic. Our study has several important theoretical implications for family business and crisis management literatures. Therefore, the stagnation perspective of family business is thrown into question (Alio, 2004; Bertrand & Schoar, 2006; Neckebrouck et al., 2018), at least regarding the ability to respond to and recover from the adversities caused by the global health crisis via superior financial performance. We hope that our work will spur others to explore in detail potential differences in performance outcomes of family and nonfamily firms during the pandemic, both conceptually and empirically. Thus far, we have shown that, on average, the financial performance of family firms has been higher as that of nonfamily firms during the pandemic.

The federal and state tax authorities have implemented measures to relieve some of the burdens on taxpayers. Also, regulators such as the Central Bank of Nigeria (CBN) have developed some policy measures such as the extension of moratorium and reduction in interest rate on certain facilities amongst others to cushion the impact of the pandemic. The secondary data sources we used, and all their inherent limitations, call for future research using primary data or the combination of primary and secondary data to analyze the financial performance of family firms vs. nonfamily firms during the pandemic.

How the coronavirus may affect financial reporting and auditing

This study finds that financial factors, business contracts and stakeholders have significant relationship with the financial reporting and disclosure practices during the COVID-19 pandemic period. However, business operation and business value have no significant relationship with financial reporting and disclosure practices. To understand the temporary and long-term changes to the accounting profession that resulted from the crisis, the authors reached out to CPAs working in public accounting and industry, and asked them about their experiences.

• Hence, all the business activities have been categorized into five major aspects which are financial factors, business operations, business contracts, business value and stakeholders.
• This study, therefore, examines the impact of the COVID-19 pandemic on the financial performance of family and nonfamily firms worldwide.
• Management should apply informed judgment as it relates to these impacts on financial reporting matters.
• There is a statistically significant relationship between Corona pandemic and the process of issuing external audit report in Jordanian banks.
• Several training courses shall be hold for the employees of audit offices and the impact of Corona pandemic on audit processes shall be discussed.
• Futurity reflects the ability to forecast and anticipate the consequences of business decisions in the long term.

It also provides important and novel evidence for policymakers, particularly for firms with different ownership and management structures. Our study examined the impact of the COVID-19 pandemic on the financial performance of family and nonfamily firms worldwide. We also show that this positive family business effect varies substantially across https://www.bookstime.com/ different family firms, industrial sectors, and countries. Taken together, our study highlights that family involvement in the firm can lead to robust financial performance in the wake of adverse environmental events, but the magnitude of this impact is largely conditional on the type of family involvement, firm type, industry, and country.

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Closure of business organizations have serious implication in the financial health of an entity. 12 weeks of strict lockdown and 9 weeks of restricted movement in Bangladesh have caused many businesses to close down their operation due to low sales volume, less collection of cash and more exposure to the credit risk (Ghosh and Saima, 2021; Purayil, 2020; El-Mousawi and Kanso, 2020). Moreover, FF can be affected due to cancellation of any upcoming projects or contracts that could not be entertained because of the pandemic (Joshi, 2020). Global and local professional accounting bodies have emphasized more on the managerial judgment to declare an organization amid this pandemic. Perhaps, timely declaration of stimulus package from the Government of Bangladesh and co-operation from other regulators have increased the confidence and improve the business environment which led to this insignificant relationship. The relationship signifies that the COVID-19 pandemic does not have much impact on the market value.

• While majority of the initial cases were imported, most of the new cases have no travel history or contact with such people.
• They discussed the biggest technology trends, revealed their boldest predictions for the coming year, plus, they shared their top tactical advice to help your firm get ahead beyond 2021.
• COVID-19 has led to an extremely difficult year for everyone across the globe.
• The new complex context of decision-making caused by the pandemic needs to keep information and analytical support up to date.
• We eliminated firms with missing financial, accounting, or pandemic data from the sample following common practice in the field.
• The survival of business operations depends largely on how the organisation manages its financial resources.

Many firms are actively working on a permanent flex-work policy by giving employees 2-3 day work-from-anywhere options. There’s an important distinction here between “doing digital” – using technology available – to “being digital.” It’s critical that the industry isn’t just implementing the technology and folding it into current practices, but that we are using technology to reevaluate our processes. We need to invest in how to use technology as a way to transform our business to be more effective, efficient and to scale better. Here at D&K Accounting, we are a team of profit-first professionals who aim not only to help businesses across the UK look after their finances but to implement where we can the Profit First way of thinking to transform how businesses are operating for the better. Along with other industries, the pandemic has seen many more accountancy firms have their staff work from home. The accountancy industry did have around 40% of its staff on average working from home prior to the pandemic, however, this more than doubled to 83% during the COVID lockdowns.

necessary skills for the post-pandemic accounting firm

Tables 13 and 14 provide empirical support to the above-mentioned prediction. Specifically, as compared to nonfamily firms, family-managed firms and family-owned and managed have better weathered the pandemic only in industries with low concentration, particularly the cluster of founder-led family firms. A possible explanation of this finding is that family firms, who have lower cost of debt (Anderson & Reeb, 2003) and higher employee productivity (Sraer & Thesmar, 2007) than nonfamily firms, were better able to capitalize these two strengths throughout the pandemic in more competitive industries. The supposition behind these results is that family involvement can bring value to the firm in adverse economic times, but this effect depends on the type of family involvement in the firm. Firms with strong family involvement either in management or in both management and ownership on average demonstrated better financial performance during the COVID-19 pandemic than nonfamily firms.

Different countries have come up with different policies in order to stimulate and revive the business environment that was hit by the novel corona virus. Many businesses if not all have been affected by the novel COVID-19 Pandemics. Many researchers Gaspar and Mauro (2020), Twesige et al. (2020) and Ozil and Aruna (2021) have already established the impact of COVID-19 pandemic on the business world. The survival of business operations depends largely on how the organisation manages its financial resources.

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However, onboarding is a fundamental process that aids in better employee retention and productivity. With the onset of virtual and hybrid work models, the way accountants look at communication has also changed. Meetings no longer happen in physical meeting rooms, and employees no longer take breaks in cafeterias. Likewise, team engagement is no longer limited to physical games or team lunches.

• As the pandemic and what comes after continues to transform the accounting profession, CPAs need a new mindset, skill set, and tool set to thrive, says Tom Hood, executive vice president of the Association of International Certified Professional Accountants (AICPA).
• Although researchers had written on effect of the COVID-19 pandemic, but none can be seen to the best knowledge of this research, in Nigeria except the contributions of fore running audit firms like Price Water House & Coopers (PWC), KPMG, and Akintola Williams & Delloitte (AWD).
• We hope that this investigation can serve as a springboard for future studies examining the resilience of firms with different ownership and management structure in times of environmental shocks.
• RPA replaces many types of manual processes and does it quicker than the macros of yesteryear.
• Practices can get access to highly skilled accountants in countries like India, which is a more viable option than onshore and in-house hiring.
• To the extent that travel restrictions prevent auditors from visiting client sites, auditors may have to disclose scope limitations to their normal procedures.

We do not have the same conflicts as a Big 4, but we do have the combination of global reach and local knowledge. This renewed focus on advisory services especially in terms of non-audit work covering, for example ESG, combined with continued adaption of AI or RPA technologies is patently important as tech companies try to muscle into the industry but, perhaps, the biggest factor is the human element. Networks and associations seem to be continually working towards attracting specialised talent, not just for internal roles but also as customer-facing teams; providing a level of comfort that technology may not.

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And so they need to be reviewed to assess their long-term viability and suitability. As a result, practices needed to innovate and ‘hack’ their normal ways of operating. It may have been a hastily-created working from home policy, or a system workaround to send clients documents digitally. Entire organizations working from home, health and safety plans, increased office cleaning, mandated mask-use, and all client interaction happening remotely are just a few examples.

For a complete view of the latest COVID-19 resources to assist in communications with customers, employees or partners, visit BDO’s Crisis Response Resource Center. The model summary table for hypothesis two shows that there is about 21% correlation between COVID 19 pandemic and Events after the reporting period. This implies that COVID 19 pandemic has about 21% chances in events after the reporting period. Although researchers had written on effect of the COVID-19 pandemic, but none can be seen to the best knowledge of this research, in Nigeria except the contributions of fore running audit firms like Price Water House & Coopers (PWC), KPMG, and Akintola Williams & Delloitte (AWD). This paper therefore intends to provide guidance on the financial reporting considerations against the backdrop of COVID 19 on accounting considerations. The COVID-19 pandemic has accelerated the adoption of robotics process automation (RPA) within accounting firms.