Companies may try to report earnings before the impact of income tax, depreciation and coronavirus as a way of window dressing their performance for the current financial year, a senior member of the Australian Accounting Standards Board warned yesterday.
Professor Stephen Taylor told the AASB meeting, which was held as a Zoom conference, that there is potential for companies to entertain the modified reporting for this particular period because the impact of the coronavirus has been so great.
He pointed to the acronym EBITDAC, which stands for ‘earnings before income tax, depreciation and coronavirus’ on a graphic displayed on a device held up to his webcam during the first agenda item of the standard setter’s first meeting since the appointment of Dr Keith Kendall to the chairmanship.
Taylor told the board that while the standard setter may not be able to do much about it the board needed to be informed about the possible impact of this kind of reporting methodology.
Board members also agreed not to propose giving disclosure exemptions regarding reporting for rent concessions companies receive as a result of negotiating with their landlord during the coronavirus shutdown period.
The current AASB reporting framework provides for some disclosure relief for entities that are not deemed publicly accountable.
This decision by the AASB means that the board believes all of the entities that must comply with this standard need to tell the story in the same manner on matters related to any rent concessions companies receive.
Another decision made by the board was to not suggest any additional relief for not-for-profit entities from rent concessions-related reporting requirements arising from the coronavirus.
Board members were also advised that a range of frequently asked questions looking at accounting for government support and impairment of non-financial assets are expected to be finalised and available for stakeholders before the end of the financial year.