The CARES Act includes financial support to businesses in the form of loans[5] and tax relief in the form of deferred or reduced payments and possible repayments. [6] Businesses receiving federal assistance should consider the short- and long-term impact of such support on their financial condition, results of operations, liquidity and capitalization, as well as related information and critical estimates and assumptions. [7] The issues to be considered are:[8] [1] While the SEC rules do not specify measures or job requirements for such adjustments, we expect companies to reconsider their obligation to provide such information under our principles-based disclosure system. This information should reflect how management and the board of directors assess operational issues. This patient disclosure form asks you for information that we need to consider before making decisions in the circumstances of the COVID-19 virus. The Division continues to monitor how companies disclose the impact and risks of COVID-19 on their operations, financial condition and results of operations, and complements Guidance Topic #9 on disclosure with guidance for additional disclosure considerations. We continue to encourage companies to provide information that will allow investors to assess the current and expected impact of COVID-19 under management`s eye and to proactively review and update information as facts and circumstances change. This disclosure should allow an investor to understand how management and the Board of Directors are analyzing the current and anticipated impact of COVID-19 on the Company`s operations and financial condition, including liquidity and capitalization. [7] Companies must provide the required U.S. information. The information provided under GAAP referred to any support received under the CARES Act, including the accounting policies followed and the methods used to apply those principles, when they have a material impact on financial condition, cash flows or results of operations and related information.
[11] See FASB CSA topic 205-40-50. GAAP requires, among other things, information on whether there are material doubts about a company`s ability to sue the business, the conditions and events that give rise to such doubts, management`s assessment of those terms or events, and any plans to dispel those doubts. Companies have made various operational adjustments in response to the impact of COVID-19 and are generally in the process of making them. These adjustments are numerous and include a transition to telework; supply chain and distribution adjustments; and suspending or modifying certain processes to comply with health and safety policies to protect employees, contractors and customers, including as part of a return-to-work transition. These types of adjustments may affect an entity that would be material for an investment or voting decision, and affected entities should carefully consider their obligations to disclose this information to investors. [1] Companies are also conducting a diverse and sometimes complex range of financing activities in response to the impact of COVID-19 on their businesses and markets. Such activities may include the acquisition and use of credit facilities, access to public and private procurement, the implementation of supplier financing programmes and the negotiation of new or modified payment terms for customers. These sources of funding may include new modalities and structures.
It is important that companies provide sound and transparent information on how they manage short- and long-term liquidity and funding risks in the current economic environment, in particular as these efforts entail new risks or uncertainties for their business. While we have observed that companies have provided some of this information in their earnings releases, we encourage companies to assess whether any of this information should also be included in the MD&A given its potential materiality. For employees, voluntary disclosure has no impact on employment status. NOTE: The form linked below is limited to Marquette University users. .
