Updated: May 12, 2020
Date : 06.05.2020
The World has come to a standstill with practically little or no movement, suggesting that it may have been locked down for repairs. Movement and operational activities in the areas of trading, transportation and manufacturing is being slowed or halted in some places. Many service industries have not been spared. Social life and religious activities are crippled or suspended.
The situation is not as a result of military war where ammunition are fired. It is neither a world order to lock down the earth for political and economic reasons, nor that the world has come to an end. It is a practical command from a microscopic parasite, smaller than bacteria - a terror at the time the world has attained high level capacity and industrialization in various fields. It is called Coronavirus, otherwise known as COVID-19. Other authorities describe it as a Chinese Virus. This virus originated from Wuhan in China on 31st December 2019 according to the World Health Organization (WHO), where it was declared a pandemic.
The WHO describes coronavirus disease as an infectious disease caused by coronavirus. This virus, if infected, causes slight to modest respiratory ailment. Infected persons may recover under an unclear medical solution/treatment. The WHO added that this virus could spread through droplets of saliva or discharge from nose when an infected person coughs or sneezes.
This tiny parasite has virtually brought the whole world to her knees, leaving medical personnel to be over-stretched, with inadequate medical supplies and supply chains distorted - creating unprecedented impact on all profit and non-profit making institutions around the world.
Reasonable number of developed and developing countries are on lockdown due to COVID-19, a situation that has affected nearly all works of life ranging from extractive, processing, manufacturing, distribution and consumption industries. Social life has also been affected. This unprecedented coronavirus pandemic has created an emergency that has sent shock waves that have put nearly all nations hanging in a balance.
However, in this challenging time of COVID-19, the world needs to be connected; businesses and captains of industries as well as non-profit making institutions need to be informed; governments and other public institutions will need to take decisions to enable them act to stay afloat even as the pandemic surges.
A professional accountant is someone who has expertise in the area of accountancy and has achieved this through a formal education in addition to practical experience, competence, standards and ethical behaviours (IFAC 2011).
Although, it is widely seen that medical professionals and other workers are at the vanguard fighting this health challenge, professional accountants, especially ACCA members, are not left out in the fight against COVID-19. In a similar development, according to Jenny Gu and Helen Brand (April 2020), it is continually held that accounting profession and ACCA members work for public good as humanity expect professionals to act fairly and contribute to care and security of the world.
Professional accountants are seen to be at the frontline of this outbreak making available accurate analyses and key information to all stakeholders to ensure business continuity.
Because professional accountants have the privilege to responsiveness over the financial health of profit and non-profit entities, they create and make information readily available to business owners and other stakeholders for decision making. In this high pandemic era where health - related products and services are in high demand with unmatched supply, professional accountants assist in determining areas for growth on conditions of proper inventory management, financing and pricing.
There are always complexities and dynamism in supply chains even at normal business conditions. The emergency situation in the world today as a result of COVID-19 is accelerating supply chain risk. There is total distortion of free movement of information, products and services - a situation that calls for review. The distortion is causing uncertainties in demand and supply chain and professional accountants are helping to assess and manage risk, providing proactive measures in supply chain management. The strategy is basically to focus on planning, information management and sharing, monitoring and review throughout the value chain in order to control procurement plan and speed up receivables.
The World Bank approved $1.9billion as an emergency support to assist 25 developing countries for operational activities and another $8billion to private sectors affected by the pandemic to preserve jobs (worldbank.org/en/news/press-release/2020/04/02). This fund is a fast-tract facility to fight COVID-19. The United Nations and other private sectors are not left out. They made contributions that should be allocated quickly to the neediest. Professional accountants are at the centre of performance of these emergency grants to ensure accountability by creating holistic system approach to stepping up security surrounding these funds and publishing the financial statements to provide accurate financial picture that provides confidence and satisfaction to stakeholders.
Creating budget to meet optimum goal is key to all entities and it is a great concern because if cash flow and other market development funds are having problems, the budget is not right. Most organizations are going through extraordinary challenges that are causing budget movements that are afterwards affecting operational activities. Budgets are meant to support plans for growth. As the pandemic surges through the year, professional accountants are regularly reviewing and evaluating budgets based on the actual and projected, and if there is any inconsistency, then the budget needs to be re-evaluated.
Even at normal situations, many businesses and other non-profit making institutions fail shortly after take-off and one of the major causes of this is poor financial management. While we conclude that businesses are worst off in these unprecedented emergencies courtesy of COVID-19, we should not underestimate the knowledge of a professional accountant in providing expertise and skilful advice on financial forecast, cash flow and inventory management, which form the basis for helping businesses make good decisions that will accelerate achievement of economic objective in this pandemic.
Developing cost leadership strategies and establishing formidable economic forecasts will help organizations improve competitive advantages in this lockdown economy. Professional accountants are ensuring there is proper formulation of corporate strategies by providing information about cost and productivity.
Performance measurements are carried out to ascertain the going concern status as entities are expected to continue in business for a foreseeable future. This means that businesses should have all the resources needed to continue to operate. However, going by the current social and economic uncertainty, many businesses will continue to operate in an unhealthy and abnormal environment. Even though governments have helped businesses to survive in this pandemic by providing stimulus packages, the books of accounts of these businesses will certainly depend on the actual facts that may affect financial information when final statements are made.
In the same way as health workers are at the forefront fighting out this plague and exposing themselves to risk of infection, Accounting professionals, especially ACCA members, are also not immune to the risk of the pandemic. Though, unlike health workers’ exposure to risk of infection, professional accountants are exposed to the risk of appropriate professional care and skill.
Ezekiel Terzurum AGIR is a Member of ACCA and writes from West Africa
ACCA Member Survey (April, 2020) Business challenges and considerations for the Covid-19 outbreak Mainland China and Hong Kong SAR
IFAC (2011) A Proposed Definition of ‘Professional Accountant’ A Staff Paper Prepared for Consultation – Delhi, India