This pandemic, COVID-19 has led to the biggest accounting challenges in the year 2020.
The challenge of managing accounts virtually can be overcome by creating new strategies.
Old strategies have led to several challenges and ignoring them at present can prove dangerous in the long run.
Some of the biggest challenges are:
- Uncertainty: Because of new rules and regulations, uncertainty is increased. There’s confusion among accountants as to how one can move forward with new regulations, operational changes and operational environment.
- Sufficient Resources: Revenue, profit earned is less as compared to previous years. Hence, one of the major concerns for an organization is sufficient resources to repay the debts.
- Evaluation for asset impairment: During this pandemic, it is difficult to evaluate long term assets. It is necessary to test for impairment of these assets keeping in mind the pandemic.
Raw material shortage will lead to increase in cost directly affecting the operations as the market keeps on fluctuating.
- Income tax accounting: Reassessment of carryback, carry forwards impact the current and deferred provision for taxes. This also has a significant impact on assessment for a valuation allowance.
- Restructuring: If the entire business is to be reframed then several accounting considerations such as cost of discarding certain business activities, accounting for benefits provided to employees, additional closures for SEC related activities will also be restructured.
Way forward:
These are just a few, there are many more challenges faced when it comes to the accounting industry in the year 2020.
