How is Deloitte Audit responding to the risks of

General extension of financial reporting periods granted by the JSE The impact on your audit On 3 April 2020 the JSE announced that issuers with year-ends of 31 December 2019, 31 January 2020, 29 February 2020 and 31 March 2020 will receive temporary relief of two months within which to complete their year-end financial reporting process should this be required by the issuers. The Relief will enable issuers to carefully consider and unpack the IFRS implications of the impact of COVID-19.

The JSE indicated that the expect to see enhanced disclosures relating to the impact of COVID-19 on issuers during this time, which can be time consuming. The JSE has in addition considered that tight reporting deadlines in this time of uncertainty could be an aggravating factor leading to the issuance of modified audit reports. The Relief should assist in removing such obstacles, as well as any potential impediment to quality audits. The JSE urged issuers to consider all aspects of their financial information publication timelines so as to make appropriate use of the Relief and thereafter to communicate these to the market via SENS.<br>

Reporting in uncertain times 1 2 3 4 5 Potential diminished demand for products or services;
Observed reduced trading and volume reductions;
Impact on revenues compared to prior periods or budgets;
Manufacturing interruptions;

Impact on supply chains;
Any short term observations on customers’ ability to make or delay payments; and Increase in costs (and reduced profit margins) due to forex movements which cannot be passed on the customers. Cash resources currently to the company’s disposal: The amount of cash and cash equivalents available to the company;
Any restrictions imposed on accessing cash especially cross borders (including exchange controls and tax implications); and
The currencies in which cash is held, as exchange rate movements can adversely impact the cash balances. Impact assessment - Observed impact on the company and the extent of operational disruption since the start of the outbreak, including: Opportunities for obtaining cash / liquidity in the short-term The availability of sufficient committed borrowing facilities for the foreseeable future and whether there are indicators that the lending counterparty will be unable to provide this funding;
Access to existing sources of capital (e.g., available line of credit, government aid);
Committed facilities which remains undrawn and the assessment if these facilities remain in place or if there is a risk that the facilities may be withdrawn;
Likely changes to facilities and loan agreements;
Increased interest costs on further funding and forex impact on repayments;

Whether the company has additional support, e.g. from related businesses, shareholders, suppliers;
Whether there are any covenants that are being imposed or waived including measurement dates and any possible negative impacts COVID-19 may have on covenants in future (e.g. Value to Loan ratios impacted by lower fair values of assets); and
The existence of any unencumbered assets which can be used for asset backed finance or security. Company’s ability to manage cash outflows / expenditures in the short-term Contractual obligations due or anticipated within one year, cognisant of currencies of settlement;
Availability of support schemes by financiers, including payment holidays and if such schemes have already been agreed to;
Changes to dividend policies or timing of distributions;


Agreements with key suppliers or landlords on payment holidays or reduced cash payments, including the agreed time frame;
Committed CAPEX expenditure and the company’s ability to defer major CAPEX projects and the company’s ability to claim force majeure if applicable; and
The ability to avoid / manage costs through a fixed vs. variable cost analysis. Other actions taken or to be taken to ensure the company continues as a going concern Whether there are any intergroup guarantees and commitments (obtained or provided);
Information on the nature of any government-backed support, by country and any conditions that attach to this, and the company’s ability to meet such conditions;





Information about any stress testing/reverse stress testing carried out and how the viability of different parts of the group is being affected;
Changes in business models or strategies previously in place; and
How the company is supporting its employees and (key) suppliers which is especially important within the context of preferential and BEE procurement. Going Concern – impact of Covid-19<br>

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