Accountants in the UK have always been business saviours, especially in the last six months or so. The COVID-19 came as mayhem for businesses, specially for small businesses. But it is during the tough times that the true character of an entity is known and Accountants have once again succeeded in proving their worth. So, here are our thought on Accounting during pandemic.
From overseeing financial accounting to overtaking advisory roles to filing for various government-aided loans, Accountants have used their financial erudite to help businesses from sinking. However, the storm isn’t over yet as the economic downturn caused due to the Covid-19 is yet to hit the rock bottom. And while the world governments are working hard towards finding a possible cure to fight the pandemic, it may be years before we can return to where we were, economically. This brings us to the conclusion that Accountants have a more important role to play in the near future.
This also frames the complexity of the issues that we will be discussing here which are the ‘Accounting Dilemmas’ that accountants will have to deal with in the coming months and how they need to be attuned both morally and professionally to be more effective.
Roles accountants are going to play:
As the effects of the pandemic continue to affect more and more businesses, here are a few roles (Advisory roles) that Accountants will have to take part in.
- Analytical roles
- Client-dealing roles
- Technical Accounting roles
Now why Accountants need to focus on these roles is a separate issue which needs some discussion that follows hereafter:
Businesses are in dire need to correctly understand their current financial position and develop restructuring plans accordingly. Also, the UK government had been pretty proactive to fill up the financial void created by the necessary lockdown that was imposed to curtail the spread of COVID-19. The UK government announced various aid schemes to help businesses tackle the financial crisis. These schemes offer financial support measures to help businesses during these tough times, including loan schemes, furlough schemes, tax deferral, and business rates relief.
- Coronavirus Job Retention Scheme (CJRS / ‘Furlough scheme’)
- Claiming back employees’ Statutory Sick Pay (SSP) due to COVID-19
- Coronavirus Business Interruption Loan Scheme (CBILS)
- Bounce Back Loan Scheme (BBLS)
- Future Fund
- Business Support Grants
However, amid all these schemes lie the various roles of Accountants and businesses need financial brains that can not only help businesses apply for loans or furloughs but also help them predict what the future outcomes will be.
Businesses need skilled Accountants now more than ever. Here are a few tasks that accountants can help their clients with:
- Analyse the adequate loan amount required and apply for loans accordingly
- Prepare for the changes and plan for the future
- Liquidity risk management
- Employment termination
- Tax considerations
- Modifications of contractual arrangements
- Performance modifications
- Business insurance recoveries
- Value measurements
- Figure out if acquisitions and mergers are a way out and how to execute them
- Deal with the ongoing concerns
The swift move towards advisory/consultant:
Accounting profession has been witnessing a rapid transformation over the past few years or so, however, the ongoing COVID situation has spurred the process as more and more business owners are trusting their Accountants and considering their advice. Accounting during pandemic has made business owners realise the true potential of their Accountants.
In the coming months or so, we may also see more and more Accountants effectively acting as client partners and helping clients achieve more profits. Overall, I think they will remain an accountant but move away from being data processors (collecting, collating and publishing data) to Value Generators (Analysing and presenting data in a more client-friendly way).
Moral/ Ethical Responsibilities of Accountants?
An Accountant’s work is going to influence a lot of lives in the coming years and Accountants owe fair moral and ethical responsibilities to their clients and all these people. While it may not be a face-to-face impact, still Accountants can make a difference.
Here are some of the moral responsibilities of Accountants:
Be honest with your clients:
These are tough times and while businesses are struggling for survival, keeping them in the dark and not providing them clear insights even if they are miserable is morally wrong. Accountants need to realise the fact that keeping their clients uninformed on their financial situation, even if it is bad, will only have negative long-term effects. Accounting during pandemic requires high-moral character and honesty from Accountants.
Don’t leave your clients hanging in the middle:
Even Accountants are in a tough spot as they have been forced to work from remote locations. However, many Accountants have found it difficult to adapt to this changing work culture due to the availability of resources. Accounting software, communication apps, data analytics tools, etc have become widely popular but not all Accountants can afford them and are suffering due to this rapid infusion of technology. But it is the moral responsibility of Accountants to not leave their clients in the middle and even if they are doing so, they should connect their clients with firms or other Accountants that can take over this responsibility on their behalf. Terminating contracts on the go may be legal but not a moral solution.
Keep the banks updated:
Many Accountants are dealing with this dilemma whether they should inform the banks about their client’s financial position and how they plan out to pay back the loans. However, it has become more of moral responsibility of the Accountants now to keep the banks updated since the economy is already in trouble and while lenders are trying to help businesses gain momentum, they also should know about the financial conditions of receivers.
Accounting during pandemic – Transition to advisory roles:
Businesses have started looking over to accountants as their trusted advisors. Although this isn’t new but more and more Accountants are now taking over such roles and helping out their clients in assessing risk management and formulating future growth plans. From downsizing(if necessary) to applying for loans to advising businesses on other financial aspects of the growth cycle, Accountants are now more than ever responsible morally for improving their client’s financial position.
Human survival has always been about looking out for one another in times of difficulties and once again we are at that point when we need to stop acting selfish and start looking out for one another, both personally and professionally.