There are a range of regulatory and compliance issues which have been addressed by the Australian Government and Commonwealth regulatory bodies, which are outlined below. The Commonwealth Department of Education, Skills and Employment has also been approached in relation to concerns about school specific compliance obligations. Apart from the cancellation of NAPLAN testing for 2020, see here, responses are being awaited.
Blanket extension to Annual Information Statement submissions
The ACNC has indicated, as a result of the impacts of COVID-19, many charities are likely to experience issues with submitting their 2019 Annual Information Statement by their due date. As a result, ACNC Commissioner the Hon Dr Gary Johns has approved a recommendation that charities with AIS due dates between 12 March 2020 and 30 August 2020 now have an extension until 31 August 2020. This would include schools with a 31 December 2019 year end.
For this and other applicable ACNC advice see here.
UPDATE: The ACNC announced on 3 April temporary regulatory relief in relation to Governance Standards 1 and 5 and External Conducts Standards 1 and 2, see all the details here.
Annual General Meetings
Restrictions imposed on indoor gatherings in response to COVID-19 may impact on organisation’s ability to hold an annual general meeting (AGM). This issue is most immediately relevant for companies with 31 December balance dates that are required to hold an AGM by 31 May 2020. For these entities, ASIC, in 20-068MR Guidelines for meeting:
- confirms it will take no action if AGMs are postponed for two months; (end of July)
- supports the holding of AGMs using appropriate technology.
Of course this will not be applicable to schools registered with ACNC, which as a charity are not required to hold an AGM in these timeframes, it is one of the provisions ‘turned-off’, see here.
Temporary Relief from Personal Liability for Trading while Insolvent
Generally, directors can be personally liable if a company trades while insolvent. This can lead to boards of directors feeling under pressure to make quick decisions to enter into an insolvency process if there is any risk that the company will experience periods where it will be trading while insolvent.
To make sure that companies have confidence to continue to trade through the Coronavirus ooutbreak, the Government has announced that directors will be temporarily relieved of their duty to prevent insolvent trading with respect to any debts incurred in the ordinary course of the company’s business. This will relieve the director of personal liability that would otherwise be associated with the insolvent trading. It will apply for six months.
Temporary relief from personal liability for insolvent trading will apply with respect to debts incurred in the ordinary course of the company’s business. The Government has indicated that “egregious” cases of dishonesty and fraud will still be subject to criminal penalties. Any debts incurred by the company will still be payable by the company.
The Impact of Coronavirus on Financial Reporting and the Auditor’s Considerations
The Australian Accounting Standards Board (AASB) and the Auditing and Assurance Standards Board (AUASB) have published a Joint FAQ to provide guidance on some of the issues financial
report preparers and auditors should consider. COVID-19 gives rise to new and rapidly changing conditions that preparers and auditors may not have previously encountered. Auditors are being encouraged to be alert and exercise professional scepticism about the potential for these conditions to give rise to possible financial reporting misstatements.