Accounting watchdog warns firms against ‘boilerplate’ Covid notes

Auditing & accounting supervisory authority notes ‘diversity of quality of reporting’

The Irish accounting regulator has called on companies to “redouble their efforts” to provide proper information on the impact of Covid-19 in their accounts, after finding varying levels of disclosure across a sample of financial reports published in recent months.

The Irish Auditing & Accounting Supervisory Authority (Iaasa) said in a document published this week that it observed "diversity of quality of reporting" across 20 interim reports and one full-year report published by publicly quoted companies, mainly for periods up to the end of June.

“Higher quality disclosures were those that clearly explained to users, in [company] specific terms, the critical judgements and sources of estimation uncertainty and any sensitivities associated with those judgements,” Iaasa said.

“Lower quality disclosures were characterised by boilerplate references to the pandemic and instances where entities remain silent or vague in explaining some of the key judgements and an absence of issuer specific information.”


The authority said it expects annual and future half-yearly reports from companies to provide greater levels of disclosures on the impact of the crisis.

These include the effects of the pandemic on financial performance, cash flows and risks facing companies. In addition, it expects companies to highlight “estimation uncertainty, sensitivities to and changes in the assumptions underpinning assets, liabilities, income, expenses and cash flows”.

Companies should also outline actions taken to mitigate the impact of the pandemic on their business as well as any changes in strategy arising from crisis.

Financial statements

Accounting bodies have said that many companies hit by Covid-19 face the prospect of auditors issuing qualified opinions on accounts, as well as challenges for directors in valuing assets and judging whether their companies can remain in business as a going concern for at least 12 months.

Accounting and auditing professionals have also warned that users of financial statements – including investors, creditors, employees, banks and suppliers – are going to have to work a lot harder at interpreting financial statements and key accounting judgments as Covid-19 has resulted in the biggest economic shock since at least the financial crisis in 2008.

“The impact of the pandemic for most [companies] constitutes a significant event,” Iaasa said, adding that companies are making “significant judgments” estimating the depth and duration of the impact of the pandemic on income, asset valuations, cash flows, ability to raise finance and renegotiate existing loan covenant terms, if necessary.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times