Comprehensive information is available on New Zealand's official COVID-19 website:
The Reporting of COVID-19 by Not For Profits and their Assurance Practitioners
According to Sikich, not-for-profits (NFPs) and their assurance practitioners are now faced with the challenge of addressing the coronavirus pandemic (COVID-19) and its potentially harmful effects on the reviewed or audited performance report. Sikich noted that there are several matters to consider, from reporting COVID-19 effects in the statement of service performance to disclosures surrounding risks and uncertainties, commitments, going concern, and subsequent events. NFP entities may deem it necessary to include such information in current reports beginning with calendar year 2019.
COVID-19 effects could also impact management’s and the auditor’s considerations of the entity’s ability to continue as a going concern under both accounting and assurance standards.
Reporting (non-authoritative example from Sikich) Going Concern (NOTE: This could also be reported under Subsequent Events) In early March, the COVID-19 virus was declared a global pandemic, and it unfortunately continues to spread rapidly. Business continuity, including supply chains and consumer demand across a broad range of industries and countries, could be severely impacted for months or more, as governments and their citizens take significant and unprecedented measures to mitigate the consequences of the pandemic. Management is carefully monitoring the situation and evaluating its options during this time. No adjustments have been made to this performance report as a result of this uncertainty.
Disclosing Impacts of COVID-19 NFPs could use this example disclosure above as a starting point and modify it to fit their specific circumstances. For example, a social service organization might note that contributions have fallen at a time when the needs for services are greatly increasing. Where the example indicates “management is carefully monitoring the situation and evaluating its options,” the NFP might wish to include any material, reasonably possible impacts, and specific steps management has taken rather than just the general statement. For instance, if the NFP’s operations were ordered closed or curtailed for a period of time, the NFP could state that fact. It is worth noting that, depending on the timing of the NFP’s year end and report issuance, adjustments to the performance report may become necessary.
Practical Guidance for NFPs
In addition to footnote disclosures above, many NFPs are looking for practical guidance on reporting costs associated with COVID-19 that are considered to be unusual or infrequent items. NFPs will likely consider costs specifically incurred to combat COVID-19 effects as unusual or infrequent items. Examples of such costs may include the following:
Costs associated with doing a “deep clean” of the NFP’s facility because a staff member tests positive for COVID-19
Costs associated with paying staff the Government Subsidy for a period of time under “Alert 4 lockdown” orders when remote work is not possible
Losses related to events that are cancelled due to COVID-19
Refunds to the NFP’s lessees of facility rental fees due to COVID-19-related closures
Write-downs or write-offs of receivables directly related to COVID-19 relief efforts