Don’t Forget Subsequent Event Footnotes in the Event of Coronavirus

The CTCPA peer review committee initiated a group conversation regarding the need for subsequent events footnotes on financial statements ready for distribution. The committee expects firms to document their consideration of subsequent events footnotes in light of the economic, financial, social and supply chain uncertainties.

The CTCPA approached the FASB whose staff provided the following authoritative guidance resources:

While there is no specific additional FASB guidance that has been provided - for public companies, recent comments from the SEC Chairman emphasized the need for companies to consider potential disclosure of subsequent events in the notes to the financial statements.  In making that evaluation, companies/entities should consider existing guidance in ASC 855 (Subsequent Events), including the disclosure requirements that begin in 855-10-50. 

While not authoritative, the following convey examples of the thought processes of several CTCPA Peer Review Committee members:

  • "Subsequent to the end of the year the financial markets have been severely impacted by the effects of the coronavirus pandemic. The value of the partnership portfolio has decreased significantly since the end of the year, while the overall long-term impact has not yet been evaluated by management."
  • "The Company as of March 16, 2020 has experienced no disruptions to its service agreements and its materials supply chain.  Based on world events it is reasonably possible that the Company’s financial position could be adversely effected.  The Company continues to monitor world events as related to its customers and its materials supply chain."
  • "This business is dependent on foot traffic, and the entity’s facilities are closed."