New accounting and human resource challenges as a result of the coronavirus have become a reality for corporate finance leaders. The pandemic and the related economic downturn have created complex accounting issues and require new judgments that companies have not faced before.

In addition, the challenges of new accounting standards have become even more daunting in this environment, as implementation of CECL, revenue, and leases are still on the short-term horizon for many companies that may not have the resources to do the work.

How corporate finance teams respond to all these challenges can have a significant impact on how companies emerge from the pandemic.

“Accounting departments and controllership functions are always looked at as providers of both the numbers and valuable business advice, but the spotlight on them is even hotter right now,” says Steve Barta, partner in the Audit and Assurance practice of Deloitte & Touche. “They must provide immediate insights about different business alternatives and the financial reporting implications, along with accounting for infrequent and new transactions as a result of the coronavirus.

Barta shares these top areas finance leaders are dealing with right now where extra attention may be needed.

Impairment. “Many companies are used to dealing with impairment issues for goodwill, intangibles, and fixed assets, but the entire left side of the balance sheet should be assessed for impairment,” says Barta. “Companies need to know which accounting standards apply, have a handle on all the models, prioritize their analyses, and identify where they need help.” He suggests estimating cash flows for valuations is very difficult right now given the uncertainties of governmental actions, timing of lifting of restrictions, and economic recovery.

Revenue. “What we are seeing now more than ever is companies make changes to contracts to keep everything flowing with their suppliers and customers, like providing relief from penalties and minimum quantities,” Barta says. “The key is evaluating whether these are contract modifications under ASC 606, or just fulfillment of the terms of the existing contract.” A broad issue to be considered is whether the pandemic qualifies as a “force majeure” event under existing contract language.

Debt. Similar to revenue contracts, changes to debt arrangements need to be evaluated to determine if they are modifications or extinguishments under the accounting guidance. “There are many financial instrument and debt-related issues under the CARES Act, especially for smaller companies getting new SBA loans,” Barta says. “The structure of these is unique as some of the loans are forgivable, and these need to be evaluated for the form versus the substance based on the intent of the CARES Act.” There is no guidance in U.S. GAAP that specifically addresses the accounting for a forgivable loan from a government entity, and companies may have to look to the government grant accounting contribution model.

Investments. Barta recommends companies inventory all their investments and consider which of the different impairment models applies to each of them. “Investments that don’t have readily determinable market values are harder to evaluate, because they need to be evaluated now and periodically for impairment,” he says. “It’s important to get the impairment analysis right because once you write these investments down you usually can’t write them back up absent a market transaction.”

Internal controls. As companies are learning to function in a remote environment, they are facing unique internal control issues. “Certain individuals may not be able to perform their usual controls because they are sick, a family member is sick, they are home schooling their child, or they have no Internet access and can’t work from home,” Barta says.” This is an area where third parties can help, including best practices for remote closes, strengthening internal controls, and creating redundancies.

Financial statement disclosures. “A question I get a lot is, ‘What are we required to say?’ ” Barta says. “I tell clients there is what’s required in the accounting literature, but clarity and transparency is very important right now because the coronavirus pandemic has created new issues that are unprecedented.” He encourages companies to disclose what they did so readers understand, like how they accounted for a new loan or where they classified an expense on the income statement, especially if the accounting literature is not clear.

Rather than taking this all on alone, Barta recommends finance leaders tap into their auditors, accounting advisers, and other professionals for advice. “There is no limit to the circumstances under which companies can reach out,” Barta suggests.