Managing in a downturn: issues to consider

Financial Reporting

As a result of the credit crisis, there is significant economic upheaval – both globally and in Canada. Therefore, your company’s management team should increase its attention to issues that may impact financial statements and disclosure requirements. Some events and circumstances may cast doubt on the use of the going concern assumption and require disclosure in the financial statements. These can include an inability to obtain or renew financing, a reduced demand for products, a decline in prices, an inability to pay creditors on due dates, negative operating cash flows and substantial operating losses. Your management team should be alert to the going concern implications of these events and circumstances. They should also be cognizant of valuation methodologies for assets, including accounts receivables, short- and long-term investments, strategic partnerships and pensions.

Contact a member of the PwC team to learn more about financial reporting challenges in difficult financial times and ways in which to meet them.

Publications of interest

A new Strategic Position - Redefining Internal Audit in an Economic Downturn
This paper discusses how the financial crisis is shifting the focus on internal audit from regulatory compliance to managing operations and risks more effectively.

Transcript: Strategy Talks – with Dean & Helen: the PwC Managing in a Downturn Podcast Series -- Episode 6
PwC’s Strategy Talks podcast series welcomes guest speaker Mike Walke, who talks about the recession’s impact on financial reporting and accounting.

Transcript: Strategy Talks – with Dean & Helen: the PwC Managing in a Downturn Podcast Series -- Episode 5
PwC's Strategy Talks podcast series welcomes guest speaker Mike Walke, who talks about the recession's impact on financial reporting and accounting.

Preserving Shareholder Value Through Asset Conservation
This fact sheet explores business issues related to asset conservation, explains how PwC can help as your independent financial advisor, and outlines matters to consider when implementing an asset preservation program.

2008-11-26 How the Credit Crunch Affects an Employer’s Accounting for and Disclosure of its Defined Benefit Pension Plans
This Newsletter discusses the impact of the credit crunch on an employer’s accounting for and disclosure of its defined benefit pension plans under Canadian GAAP.

2008-11-19 Going Concern, Liquidity and Recoverability -- Disclosure Considerations
This newsletter contains a memorandum which highlights the recent Going Concern amendments to CICA Handbook section 1400.08A.

2008-11-11 Accounting for Impairments in Investments
This Newsletter contains a memorandum which highlights accounting for impairments in investments during this credit crunch.

2008-10-20 Accounting for Turbulent Times
This Newsletter contains a memorandum which highlights Canadian GAAP financial reporting issues that require special consideration as the result of the credit crunch and deteriorations in market conditions.