HOW TO PROTECT AND KEEP FINANCIAL REPORTING SOUND IN TIMES OF THE COVID-19 PANDEMIC?

What is it about?

Financial reporting is not immune to the COVID-19 pandemic, even in small corners of the world like Serbia. As we expected, it was strongly and deeply affected by the economic crises caused by the pandemic. Not surprisingly, we find that financial reporting problems regarding future expectations and uncertainty are an important source of concern for preparers of financial statements, which implies that standard-setters, such as the IASB, should pay more attention to those problems to make financial reporting standards more adequate to disturbances in economic conditions. The preparers who apply IFRS for SMEs perceived slightly more difficulties than those who apply full IFRSs. This means that the IASB should pay more attention to the ability of IFRS for SMEs to be an adequate financial reporting basis in crisis conditions.

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Photo by alex° on Unsplash

Photo by alex° on Unsplash

Why is it important?

Several reasons make the transitioning economy of Serbia a good fit for a study on the impact of COVID-19 on financial reporting. Namely, IFRSs have relatively long been a key financial reporting base in Serbia, accounting information has specific characteristics in the Serbian economy, and financial reporting regulation in the Serbian economy is undergoing frequent changes. Additionally, the regulatory framework for financial reporting in Serbia was the subject of comprehensive reform immediately before and during the COVID-19 pandemic. Therefore, in addition to the difficulties imposed by the COVID-19 pandemic, reporting entities in Serbia also faced the need to adapt to new accounting regulations simultaneously. Specifically, they needed to adapt to the new and revised IASB’s documents and consequently reconsider their accounting policies, as well as adapt to the new chart of accounts and financial statement templates.

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