Business Climate: COVID-19 Affects Accounting Standards in India
COVID-19 affects accounting standards of the biggest businesses in the country. India, which serves as the home of millions of foreign companies, in what was once the favourite place to do business, suffered more than other Asian countries.
The onset of the deadly virus from Wuhan, China proved to be a game-changer in many aspects of India. Among them includes the country’s accounting standards.
Just like in any other countries hit by the pandemic, India also went into recession.
As the government eases restrictions, economic experts start to realize how COVID-19 impacts India as a nation.
Major Changes in India’s Business Scene
The global pandemic displaced not a few business entities and triggered disarray in the economic activities of several industries in India.
The economic slump caused industries to incur heavy losses. They continue shelling out funds and an absolute zero coming in. Among the fixed operating expenses include:
- Rent covering the place of business
- Monthly utility bills [electricity, water supply, internet, etc.]
- Salaries of regular employees,
- Maintenance of its equipment and company vehicles
As such, many of these businesses opted to close shops or scale-down their operations through variation of approaches. Among the radical steps taken include:
- Workforce reduction
- Halved salaries
- Limited workdays
- Declaration of “temporary closure”
As a result, the demand for accounting work significantly dropped at a record-low. For a handful of accounting firms, there is nothing to account for, at least until business activities normalize. However, economic experts admitted there’s no timetable to look at as insofar as to when the situation would normalize.
Economic experts fear it’s far-fetched from taking place soon.
Further, we’ll explore how COVID-19 affects accounting standards in India and other parts of Asia.
Dealing with Accounting Concerns Amid COVID-19
COVID-19 affects accounting standards in every aspect of the trade. Jobs, clientele, the magnitude of work took a heavy toll.
Most accounting firms slashed service fees if only to generate work.
Interestingly, even with significant slashing on their service fees, the magnitude of how COVID-19 affects accounting standards remains minimal. In short, price-cut hardly changed the quality of work by the few remaining legitimate business advisors offering accounting services in India.
But how does the accounting sector deal with companies which have filed insolvency due to bankruptcy?
Accounting System Embarking on Judgment Call
To date, even the brightest economists in India are oblivious to how far COVID-19 affects accounting standards in India.
As it is, auditors will have to exercise their judgment while working on financial statements and audits during this time.
In the meantime, auditors, accountants and bookkeepers expect the worst. Nonetheless, the accounting industry is morally bound to continue what they do best – work with the highest accounting standard for which they are known for.
Upholding Accounting Standards Amid Pandemic
Companies suffering from heavy financial losses need accounting services in India more than ever. Accountants in India guided and should continue doing so especially when it matters most.
With the help of accounting firms, companies which defaulted bank obligations, deal with and come up with something seen to make both ends meet.
And why would accounting firms do that? Because for as long as there are assets and other forms of resources that could be used for liquidation purposes, the company remains “operational.” Under this condition, the possibility of survival remains high. It is the job of the accounting services in India to make a detailed declaration on how COVID-19 affects accounting standards of these companies.
With able accounting service providers in India, there’s still hope for an adversely affected company to recover.
We’re Not Jumping Ship
Even with a disrupted economic activity resulting in heavy losses among millions of businesses, a responsible accounting firm exercises best practices in the accounting trade.
Providing professional advice to an adversely affected company becomes of utmost importance. A good judgment call may even “save one’s ship from sinking”.
Under these extreme conditions, 3E Accounting in India remains committed to providing the highest accounting standards, as our share in helping the business sector to recover from the ill-effects of the global pandemic.
For distressed companies badly in need of professional help, feel free to contact us.