IMPACT REGARDING YEAR-END CLOSING PROCEDURES

• 1) Financial year ended 31/12/2019 (or another accounting year-ending before the outbreak of the COVID-19 crisis in Belgium)

The crisis will not justify an adjustment of the final figures but, from an accounting point of view, should be considered as "non-adjusting subsequent event". In a Belgian Accounting Standards Commission (CBN/CNC) advice n° 2018/08, the advice describes the accounting consequences for BEGAAP of events occurring after the closing of the financial year and prior to the approval of the annual accounts.

Companies will have to add a disclosure in the financial statements including an appropriate explanation of the nature of these material events after the reporting period and an estimation of its financial effect on the company. If the company cannot make an appropriate estimation, it will have to be justified.  All relevant information available up to the date of approval of the annual accounts must be taken into account. Entities should carefully consider the individual facts and circumstances.

In case the company is required to draw up an annual report by law or by the articles of association of the company, it should include the impact of the crisis and its activities.

• Main risks and uncertainties the company is facing;
• Significant events after the date of closing;  
• A disclosure regarding fair value measures in going concern, in case the balance sheet shows losses that are being carried forward  or in case the P & L show losses for two consecutive financial years.

For example following consequences can be of importance:

• (Temporary) closure or interruption of production/activity;
• Material impact on the turnover;
• Unavailability of personnel;
• Termination of contracts;
• Effect on cashflow;
• Effect on collection of outstanding debts; 
• Impact on the industry on short and long term;
• …

2) Financial year ended after the outbreak of the COVID-19 crisis in Belgium (as of February 2020)

When drafting the figures and annual accounts, the company should immediately consider possible consequences on the figures. The company should respect the accounting principle of prudence in a true and fair view.

Please find hereafter some examples of accounting adjustments - these can be qualified as 'non-recurring' results:

• Provisions for liabilities and charges;
• Additional depreciations and amortizations;
• Provisions for additional advice and other costs related to the crisis;
• Impairment in respect to receivables;
• Accruals for restructuring;
• …

Because of the current crisis, the tax authorities consider the COVID-19 crisis as exceptional circumstances justifying the exemption from impairment on trade receivables. However, the companies will have to individually identify every debtor with solvency problems in the statement 204.3.

An assessment will have to be made as to whether the evaluation in "going concern" is still justified by analysing the cash flow prospects in the short and long term (> 1 year).

In the case of valuation in discontinuity:

• start-up expenses must be fully depreciated;
• fixed and current assets have to be accounted at estimated market value;
• provisions are made for all costs related to the interruption of the activity.