Geopolitical conflict has continued to create significant shifts in the global risk landscape and is having a pervasive economic impact. Investors will want to understand if and how this is affecting an entity’s operations, risk exposure and outlook. Entities must carefully consider the impact on their financial statements and disclosures. Items to look out for include:
  • Impacts of restrictions and sanctions on trade, investing, and financing (including restricted access to cash accounts, and foreign currency reserves).
  • Impairment, onerous contracts and contingencies.
  • Breaches of supply contracts or financial covenants.
  • Foreign exchange exposure and translation of foreign currency transactions.
  • Level of influence or power over existing associates and subsidiaries located in areas of conflict.
  • Post balance sheet events and related disclosure for non-adjusting material events.
In depth INT2022-05 provides accounting guidance in the context of the conflict between Russia and Ukraine and includes considerations relevant to other geopolitical conflicts.
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