Accounting issues in the context of COVID-19
In the context of the global COVID-19 pandemic, the Government and the Bank of Russia are taking measures to resist its consequences and companies are adapting to new methods of working in conditions of social isolation, while the issue of preparing annual accounting (financial) statements remains open.
In the current situation, the following measures may be required:
- to reclassify assets and liabilities from long-term to short-term, from non-current to current ones;
- to devalue assets, it is also possible to write them off completely;
- to recalculate the estimated liabilities.
Each case is considered individually, however most companies need to take the following measures:
1) Disclose the nature of events after the reporting date when it comes to accountancy requirements 7/98, expressed in the following factors:
- the spread of coronavirus infection COVID-19;
- volatility in financial and currency markets;
- the oil prices growth and, consequently, the depreciation of the ruble against a foreign currency;
- decrease in business activities, particularly in the B2C sector.
2) Evaluate these events in terms of the company's financial results, position and capital. The rating can be neutral, negative (for example, for companies in the tourism sector), or positive (for example, for online companies that already officially declare that they cannot cope with the increased demand for their services). The inability to accurately estimate the effect of the events above is also indicated in the notes to the financial statements.
3) For further actions planning it is also necessary to decide whether a company can continue its operations in the foreseeable future, whether there are intentions and the need for liquidation or significant reduction of activities, and, consequently, whether the obligations will be repaid in accordance with the established procedure (accountancy requirements 1/2008). If there is a significant uncertainty about the business continuity, the organization must indicate such uncertainty in the notes to the financial statements.
In the short term, we remind you that by March 31, 2020, companies must provide a copy of the annual accounting (financial) statements for 2019 to the tax authority at the location. Afterwards, if the company is subject to a statutory audit, its results are published in the Unified Federal Register of information about the facts of legal entities' activities (fedresurs.ru) within 3 days from the date of receiving of the audit report, and within 10 days the report should be also provided to the Federal Tax Service.
If we previously recommended publishing audit results through a notary, it is currently safer to do it independently, you will only need the appropriate e-signature. There are no derogations from the general rule.
An administrative fine of 5 000 rubles per official is threatened for the late submission of accounting reports to the Federal Register.
Under the paragraph 1 of the Article 126 of the Tax Сode of the Russian Federation, the fine of 200 rubles for each non-submitted (untimely submitted) form (component) of accounting (financial) statements is imposed for the violation of the deadline for annual accounting (financial) statements submission to the tax authority.
In the long term, accountants will have to report to the regulatory authorities for the 1st quarter of 2020, so it will be necessary to reflect all the facts of economic activity for this period. We call on everyone to be socially responsible and to adhere to a maximum self-isolation. Electronic document management will help you transfer and receive primary documents. Please note that even a contract can be concluded by exchanging electronic documents signed with an enhanced qualified e-signature (Article 434 of the Civil Code of the Russian Federation, Federal law No. 63-FZ "On electronic signature" dated 06.04.2011).
Stay tuned and we will keep you up to date.
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Oxana Slavinskaya Director, Accounting Outsourcing Department - Moscow
Andrey Gadubyak Senior Business Development Manager - Moscow
COVID-19 & Your Business
During this time of uncertainty and volatility, our stakeholders need a source of reliable information to help meet the challenges they face. Our office and the Group are closely monitoring the Coronavirus situation to be prepared and respond appropriately. Mazars is creating a series of useful insights written by our experts to offer advice, guidance and practical support to help business leaders to make complex decisions on a daily basis and keep their workforce and communities safe, while moving the business forward.