How The Pandemic Is Affecting The Accounting Industry

Professional accountants must apply a deeper understanding of data analytics and technology to their work while being fully attuned to the ethical risks in order to uphold the profession’s good reputation. For example, the pandemic saw cybercrimes and fraud increase globally as unusual and remote circumstances were taken advantage of and new ways to exploit a broader and deeper range of organizations and individuals were found.

This paper provides a timely and comprehensive picture of the first reflections and research findings on the impacts of the COVID-19 pandemic on one’s interpretation of accounting, accountability and management practices. A greater workload, combined with a shift to remote work, has presented some issues for accounting firms and their staff. The most common challenges that survey respondents and their staff can all be attributed to one or both of those factors. Pursuing mergers and acquisitions, filing for bankruptcy protection, building a new production facility or restructuring from the ground up are major changes, albeit ones that many companies might need to strongly consider as markets expand or contract . All of these changes require accountants and corporate finance professionals with strong technical skills and knowledge as well as the communications and leadership savvy required to collaborate with those across their organizations.

Of course, the management of the companies is expected to provide the creative solutions, an economically sound strategy or a policy of working in a new environment. The new complex context of decision-making caused by the pandemic needs to keep information and analytical support up to date. Therefore, this article proposes to pay attention to some aspects of information and analytical work that are of particular importance during the period of the impact of the pandemic and its consequences. The list of such aspects includes the mechanisms for ensuring business transparency, the application of stakeholder theory and change management theory, the organization of a systematic business analysis, the concept of social responsibility and ESG criteria.

  • Participants are either certified public accountants or candidates who are in the process of applying for the CPA designation.
  • To stay ahead, you need a dynamic infrastructure that drives value from the core of your digital transformation strategy.
  • The word itself is synonymous with development and, in much of today’s business landscape, it continues to reshape industries and businesses, even in the trying times brought about by the COVID-19 health crisis.
  • One of the biggest challenges professional accountants face amidst the pandemic recovery will be continuing to seek out a better understanding of the issues that still lie ahead and what the ethics consequences of them might be.
  • Aspiring professionals in the field have to take to heart the emerging accounting trends and techniques to make inroads in the talent market.
  • For example, in both situations an employee may file for unemployment and receive government assistance, but being told “you are no longer an employee” versus “we don’t currently have any work for you but will bring you back as soon as we do” paints a very different picture.

Assurance, tax, and consulting offered through Moss Adams LLP. ISO/IEC services offered through Cadence Assurance LLC, a Moss Adams company. Wealth management offered through Moss Adams Wealth Advisors LLC. Services from India provided by Moss Adams LLP. To learn more about how COVID-19 has impacted accounting functions or for outsourced help to meet your business’ accounting needs, contact your Moss Adams professional. Given the lack of guidance in US GAAP on the accounting for and disclosure of government grants, it’s critical to disclose your accounting policy for government grants if the grant amounts are material to your financial statements. In response to the pandemic, domestic and international governments are considering, or have implemented, legislation to help entities that have experienced financial difficulty.

How The Coronavirus May Affect Financial Reporting And Auditing

Importantly, while remaining nimble, professional accountants must continue to adhere to the Code, including applying its conceptual framework in these atypical situations. In the next installment of this series, we will address in further detail what businesses can do in the event one or more of their employees falls ill, as well as highlight practices that businesses can employ as they become accustomed to a remote work world. In addition to adapting to communicating in a virtual world, the second set of actions to take in the immediate term are around ensuring your key finance and business processes are operational in a virtual environment. BDO Center for Accounting and SEC Matters Your one stop for accounting guidance, financial reporting insights, and regulatory hot topics. BDO Institute for Nonprofit Excellence Innovative solutions to nonprofit organizations, helping clients position their organizations to navigate the industry in an intensely competitive environment.

  • A good number of professionals in finance are concerned about maintaining or enhancing their skills during this challenging business environment.
  • Countless small business owners, CEOs, government leaders and more confronted this reality in 2020.
  • Many accounting leaders and accountants are feeling the business impact of automation and high-tech systems .
  • This shows that the accounting industry is shifting from its reactive nature to becoming more proactive.
  • 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.
  • For those new to the technologies, the learning curve did not appear to be very steep, and people learned to adapt swiftly.

And these new ways of operating need to be done in a way that adheres to established standards and delivers assurance to stakeholders. Secondly, despite the challenges of the COVID-19 pandemic, many organizations have found ways to remain functional through new processes and ways of operating.

Utilizing Social Media

The pandemic has permanently altered our industry, and firms that survived the last few years have proven that they can be fast and flexible. As you plan for the future, addressing workforce risks will again require you to be nimble and even experimental, trying new approaches, new mindsets, and even more new technology in your practice. Go forward boldly – and know you’re in good company with other accounting firm leaders who know you must evolve to grow.

How The Pandemic Is Affecting The Accounting Industry

The accounting profession — it doesn’t matter whether it’s audit, tax or even consulting services — are all being significantly impacted. Whether you’re providing services for someone or whether you’re providing the service yourself, it is all about “How can I use analytics better to provide whatever service it was? The standards haven’t changed, yet the pandemic has resulted in new risks.

Tax

This figure is sure to grow in the coming years, especially with a whopping 4.20 billion active social media users as of 2021 . The report attributes it to marketing demands, regulations, generation change, and client demands, as well as investments that businesses make to keep pace with the accounting world. In addition, the changes in work environments brought about by the ongoing pandemic has also contributed to the changes in operational processes. With such a transformation in the industry, more and more accounting leaders and professionals are discovering new strengths in utilizing advanced solutions for accounting processes. While there is clear value in the current audit report, the world is changing rapidly and, within that context, there is growing interest in the role audit will play as a fundamental part of the wider financial reporting ecosystem. As businesses transform the way they collect and process data, the accounting industry must remain a step ahead.

  • It may be too early to judge, but the IT at home is working and I can do what I would normally do in the office.
  • Still, with technological advancements and the emergence of computerized accounting systems, accountants working from home are able to produce excellent results in their work as those in office settings.
  • Services like growth profitability and strategies, as well as business intelligence, are becoming better and are growing in numbers.
  • Clean data in the right format is essential to apply D&A, rules-based algorithms and AI.
  • Moreover, with robotic process automation , accounting professionals can rely on AI to understand client intent or base its current actions on past data (Bernard Marr & Co).
  • Other possible changes include reducing office space and ensuring the presence of emergency plans.
  • Economic actors once again found themselves in the conditions of a “new normalcy”, now it is a global coronavirus crisis.

However, these studies deal with natural or humanitarian disasters in very limited and specific areas of the world . Before the outbreak of COVID-19, we had to go back to World Wars I and II of the last century or to the Spanish flu outbreak at the beginning of the 20th century to contemplate a natural or humanitarian disaster on a global scale. Thus, the current COVID-19 crisis has highlighted the scarcity of knowledge on the role of accounting and management practices in a global emergency, where lives and human activities are put at risk all around the world. The global scale of the COVID-19 pandemic is inevitably impacting all types of organizations, such as private and public sector institutions, businesses, non-governmental organizations and not-for profit organizations. Similarly, also Delfino and van der Kolk investigate the impacts of a sudden shift from a normal work environment to remote working in professional service firms and their employees. However, they focus on the changes in management control practices during the first phases of the COVID-19 pandemic.

Pe Manufacturing Industry Insights

These included finding new ways to interact with students and deliver content and provide assessments. Research in this area highlights different approaches and identifies several outcomes from coping, with a crisis continuum from positive to negative. Aspects discussed by this literature include, among others, the role of technology, modes of online delivery, students and staff motivation, the processes of redesigning assessments and the curriculum, and staff/student engagement. Some https://www.bookstime.com/ accounting professionals may feel there’s a lack of symmetry between their time, efforts, expenses, and pricing. Accountants and their clients may have felt preoccupied with adjusting to the new reality, and old, ineffective pricing models lingered on while accountants waited for the «right time» to introduce order into the chaos. Essentially, programmable software “bots” help accountants tackle important but mundane, time-consuming tasks involved with audit, attest, and tax work.

How The Pandemic Is Affecting The Accounting Industry

In essence, a quick-moving pathogen has the potential to kill millions of people, disrupt economies and destabilize national security. Climate change, urbanization, air travel and a lack of adequate water and sanitation are all breeding grounds for fast-spreading, catastrophic diseases. In considering the diverse contributions of this special issue, the paper points out how uncertainty and change can impact the design, use and understanding of accounting, management and accountability practices and can be accepted by scholars and practitioners as part of such practices. Every entity, sector, and jurisdiction will emerge from this global crisis differently. While at least one dose of the vaccine has been administered to approximately 60% of people in Israel, 52% in the U.K., 43% in Chile and the 45% in U.S. as of early May 2021, other countries do not anticipate vaccine availability increasing until at least the second half of the year. For professional accountants, that might mean working within employer organizations and serving client entities that are in vastly different stages of recovery. The truth of the matter is even when an economy fully reopens, there is likely to be at least months more of rebuilding and playing catch-up that still has to occur.

Via an ethnographic analysis, the authors collect their data through three rounds of interviews, ethnographic observations of meetings and document analysis in five German hospitals, between February and August 2020. They articulate how actors established an “accounting infrastructure” around several indicators, such as swab tests, testing kits, ventilators and the number of intensive care beds for COVID-19 patients in the pandemic. They found that the intensive care beds are assumed as central indicators for decision-making in the hospitals. The study finds that the COVID-19 pandemic has resulted in different relations between organizations and field level and provides a valuable contribution to the role of accounting in crisis literature, although this change of emphasis on accounting is not unusual. Four papers in the special issue specifically took a country-level perspective, exploring the ways in which governments used numbers, calculative practices and big data in governing the pandemic. Many respondents commented that the pandemic accelerated the process of digitalization and paperless operation, a trend that was already slowly gaining steam prior to the COVID outbreak.

The Accounting Profession Amidst The Covid

This belief is also widely held among most age groups, only declining for those in their 60s and older. It reaches its peak with those ages 30 to 39, perhaps because many of them have been out of school for some time, are at a stage in their career where they’re looking for career advancement, and are thus feeling the need to refresh their skills. Companies in the U.S. were the least likely to have reduced the size of their staff (36.6% of U.S. respondents reported their organization let go some or most of their staff), followed by China (42.4%) and India (59.8%). Those in the Middle East—Saudi Arabia (60.3%) and UAE (61.1%)—were most likely to have reduced staff size. Some companies could face challenges in their ability to continue operating as a going concern. The risks of material misstatement could relate to recording costs in the improper period, incorrect measurement or presentation of restructuring liabilities and costs, or inadequate disclosures. If you have construction and production-type contracts, you may also need to consider if a change in your estimated costs would result in a contract loss that needs to be recognized immediately.

How The Pandemic Is Affecting The Accounting Industry

During this time of profoundly uneven progression, professional accountants will be under huge strain. For more than a year, the world has been duly tested by the challenges resulting from the COVID-19 pandemic. However, as jurisdictions around the world progress toward a more hopeful future, the ethics challenges the accountancy profession and stakeholders face are far from over. The company now serves over 7,000 customers in 18+ countries, which collectively completed over 5 million client projects on time.

The second theme considers accounting practices used to make exceptional decisions at the organizational level in times of crisis. The third theme addresses a relevant frontier of research into accounting and inequalities. As trusted advisors, it is the duty of professional accountants to be competent in these advancements How The Pandemic Is Affecting The Accounting Industry where they are involved in their development and implementation. This involves attaining and maintaining the knowledge and skill required for the job. In the context of today’s world, this means learning how to properly understand threats to the fundamental principles of ethics from the technology.

Bots work like advanced Microsoft Excel macros that can function across multiple applications; however, bots can handle a much larger volume of data than a typical macro, such as general-ledger or ERP work that requires a lot of manual data entry. RPA replaces many types of manual processes and does it quicker than the macros of yesteryear. The Global Preparedness Monitoring Board warned in September 2019 that the world was at risk from deadly pandemics and governments should prepare for – and mitigate – the effects of a widespread global health emergency that could kill millions and damage the global economy. This report echoes the many prior warnings in scientific publications of the inevitability of the next pandemic (e.g. Murray et al., 2006), especially in the aftermath of the severe acute respiratory syndrome and the Influenza A outbreaks in 2003 and 2009, respectively. Despite the increasingly dire risk of widespread epidemics, the world remained unprepared. The GPMB highlights that epidemic-prone diseases such as Ebola, influenza and SARS are frequently challenging to manage in the face of prolonged conflicts, fragile states and forced migration. At the same time, the threat of a pandemic spreading around the globe is a real one.

It is often stated that accounting firms can benefit from a crisis, and this survey backs that up. The struggling economy and influx of government stimulus packages in almost all regions combined to present accounting firms with more work than ever. We have all heard how much this crisis has impacted businesses and industries around the world. But it was unclear exactly what challenges are having the biggest impact, how firms like yours are adapting, and what the future might look like.

Accounting Pros Still Love Spreadsheets

The above final reflections show that fruitful future avenues for research remain open for accounting scholars. As accounting and management scholars, we believe that there is an urgent need for new studies addressing the implications of large-scale global crises for individuals, organizations and society, which had still remained mostly unexamined in accounting and management research. Contributions do exist on the role played by accounting in the global financial crisis that began in 2008 (e.g. Barbera et al., 2020; Al Mahameed et al., 2020; Bracci et al., 2015; Chabrak and Gendron, 2015; Hodges and Lapsley, 2016). Extant research has investigated the impacts of extreme events on organizations and their decision-making (Wilson et al., 2010) and the resilience of organizations in the context of specific crises or extreme events (Rouleau et al., 2021; Linnenluecke, 2017; Barbera et al., 2017).

COVID-19 has already had a significant impact on global financial markets, and it may have accounting implications for many entities. A good number of professionals in finance are concerned about maintaining or enhancing their skills during this challenging business environment. So what skills have they been working on, perhaps during their stay-at-home period? The COVID-19 pandemic has presented business with unprecedented challenges, putting organizations under pressure in ways that weren’t anticipated and posing new demands on the finance function. More than a third of the planet’s population is under some form of restriction. Others perhaps not — DIY store shelves are emptying; nurseries are starting to look more like deserts.

Our comprehensive IFRS in Focus — Accounting considerations related to the Coronavirus 2019 Disease covers a number of accounting considerations arising as a result of COVID-19. Here’s how one professional adapted to the personal and professional changes. As we progress through 2020, more information is coming to light on the scale and impact of coronavirus. There may be a greater degree of judgement required when identifying the conditions at balance sheet dates after 2019, and therefore assessing whether the developments are adjusting or non-adjusting events. The coronavirus is ordinarily an adjusting event for any reporting period ending as from 31 January 2020.

The Paycheck Protection Program was a much-needed life preserver for struggling businesses in 2020, but the intricacies of the program were a lot to work through. Applications, required paperwork, loan forgiveness and other factors could make the program confusing for business owners. CPA firms reported expanding services to help businesses take advantage of the program, making up 39% of new services offered to clients. 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. Because of the extensive and unpredictable nature of the coronavirus epidemic, auditors can expect that their assessments of clients’ accounting estimates will be even more complicated than usual in upcoming reporting periods.

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