Abstract:

The purpose of the paper is to examine the way Covid-19 influenced the disclosures made by financial statement preparers in the statutory financial statements. The pandemic was strong but one-off factor that stressed performance of many companies. That makes it difficult to stakeholders to distinguish between business model specific changes to entity’s performance and external,  non-recurring factors that are materially disrupting the prospective dimension of financial information. Qualitative feature of usefulness requires companies to deliver fully comparable financial information to stakeholders. Thus one of the important question is: how preparers of financial statements cope with providing fully comparative information in the financial statement prepared for Covid-19 dominated year.

The focus in the paper was made on the actual practices of companies quoted on Warsaw Stock Exchange – the biggest regulated market of EME region with the stress on entities whose performance was heavily deteriorated by pandemic. The research method took detailed and thorough analysis of consolidated financial statements for the year 2020 prepared by companies chosen to the research sample. Even though the sample was limited, the results bring clear evidence that observed regularity was evident: managers of strongly affected companies have strong incentive to extend significantly the range of additional, voluntary disclosures explaining the negative impact of one-off event being out of managers’ control. Even though additional disclosures are hardly supportive to comparativeness of financial information.

The results suggest that range of obligatory disclosure or incentives to enhance voluntary disclosure should be subject of revision by standard setters. Even though the qualitative feature of comparativeness is mentioned by IFRS Conceptual Framework, it happen to be excluded from the range of IFRS pronouncements becoming EU regulations. Thus the pressure on preparers of financial statement is limited. It is especially noticeable by just few attempts observed in a research sample made by managers to quantify isolated impact of Covid-19 pandemic especially in cases of extremely violent performance shock.