Going concern thoughts for accountants: I have stopped cross posting all my comments on the pandemic to this blog. The focus here is accounting and attestation issues.
The following conversation is worth listing here, so you can bring into consideration what is going on in the broader economy as you ponder your client’s going concern assessments. The economic damage from the shutdown is an issue for audits, reviews, and comps.
You might pay particular attention to comments by the Atlanta Fed on near-term GDP forecasts.
The damage from the lockdown is spreading. More news is emerging about the devastation that took place in just the first full month of the closure.
The damage will continue to grow the longer the shutdown continues. At some point it will start compounding, growing at a faster rate out of proportion to the time that is passing. Keeping the economy closed now is unnecessarily so the compounding damage is a choice.
Merely a few of the articles in recent days:
- Guess on GDP shrinkage in next quarter
- Disproportionate number of poorer households hit by job losses
- Collapse of tax revenue in New York state
- Collapse of home sales in Southern California
- Another retail chain announce store closures and another announces liquidation
It is imperative to reopen the economy in full, not just for ‘curb-side delivery.’ If we don’t open soon, I fear the following articles will be mild in comparison to what we will see in the future.
This discussion will be posted on several of my blogs.
5/16/20 – Fox Business – US GDP could sink over 40%: Atlanta Fed – Federal Reserve Bank of Atlanta is forecasting a 42.8% drop in GDP for the second quarter of 2020.