IGTA Journal - Summer 2020

France, Article: Accounts closing June 2020: What are the points of attention on financial instruments in the context of the health crisis ? By Mathieu Vincent, Partner, Mazars, From La Lettre du trésorier, No. 379, June – July – August 2020, magazine of AFTE, the French IGTA Member Association The current health crisis presents unprecedented challenges in terms of reduced activity levels for some companies and the need to ensure personal safety. In this context, certain points must be given particular attention at the closing in June 2020. We present below the main points related to financial instruments. Liquidity Companies must secure the accounting treatment of actions implemented to strengthen their liquidity: additional lines of credit, state-guaranteed loans, debt restructuring, optimization of working capital, etc. Companies are also encouraged to provide more detailed information on liquidity risk management: actions taken, risk measurement, covenants, etc. In this respect, it should be noted that the going concern assumption used to prepare the financial statements assumes that liquidity is secured for a period of 12 months after the balance sheet closing. Credit risks It is necessary for companies to review their receivables portfolio to assess the need for additional write-offs. In particular, it is necessary to assess the need for changes in the method for determining expected losses under IFRS 9 (impairment rates, portfolio segmentation, methods for taking guarantees into account, etc.). Cash equivalents Approved money market funds have a presumption of eligibility in cash equivalents that must be validated in times of crisis. This validation requires verification of the absence of exit restrictions and/or excessive volatility in relation to that of the benchmark monetary index. For demand and time deposits, it is recommended that the financial soundness of the counterparty be verified to validate the cash equivalent classification. Hedges There is a risk that operational hedges (foreign exchange and commodity hedges) may be de- qualified, as the decline in activity may result in the loss of the highly probable nature of the hedged risk. The health crisis may also call into question the off-balance sheet treatment of IGTA eJournal | Summer 2020 | 9