Ethics and the Coronavirus

As the number of COVID-19 cases continues to grow and the death toll mounts, its useful, from an ethics perspective, to use our experiences to date to evaluate our personal responsibilities to each other in this crisis. Why does this matter? Our society depends on communal efforts to improve the lives of everyone and this cant be done unless we act responsibly, not take advantage of others, and look out for each other.

Government Response

There is no doubt the U.S. government was not prepared for the virus outbreak. Even though China knew about it as far back as December 2019, the government acted as if it knew nothing about the potential risk to citizens of this quick-moving virus. The result has been a severe lack of testing kits, insufficient number of ventilators, and concern about the number of hospital beds in intensive care units. Moreover, the rationing of medical care may eventually occur.

The slow response contributed to the need for state and local governments across the country to declare a state of emergency. Citizens were told to self-isolate, not go out except when absolutely necessary, practice social distancing, wash hands with soap and water, not touch their faces, and avoid groups of more than 10 people. Many cities totally shut down for all intents and purposes.

The early failings on the government side raise questions about the competency and believability of federal officials. It seems that President Trump had a different take on the severity of the crisis and how quickly it could be resolved than did the scientists prompting some Americans to wonder, whom should we trust?

The stock market has had a violent, negative reaction, virtually wiping out all the gains after Trump was elected with the fear that it would lose 50 percent or more before everything is said and done.

Perhaps the most troubling occurrence is that, at the outset, federal health employees interacted with Americans quarantined for possible exposure to the coronavirus without proper medical training or protective gear, then scattered into the general population, according to a government whistle-blower who lawmakers say faced retaliation for reporting concerns.

Accounting Issues

Many businesses have been devastated by the spread of the coronavirus. The airline industry, hotels, places of entertainment and cruise ships will lose billions of dollars. The government is working on bailout legislation to help the affected industries and their workers, who may be furloughed or fired.

The problems encountered in business that result from the spread of the coronavirus creates risks and uncertainties from an accounting and auditing perspective. The overriding issues are whether to record or disclose amounts related to the loss in value of assets, possible future losses given the likely duration of the virus, and disruptions in revenue streams. In this regard, making accurate estimates is important as is having the internal controls over financial reporting to make reliable risk assessments. The underlying issue of whether a business is a going concern will be a challenge for auditors.

We are living in a time of a new normal. The restrictions on our activities and physical movement should be a warning that we need to look out for each other and treat each other the way we want to be treated, the essence of the Golden Rule. If we learn that lesson, then perhaps the coronavirus will help focus our attention on personal responsibility to ourselves and communities. We will be better off on the other side of the crisis.

Question: Explain the accounting and auditing issues ( Please refer to the appropriate citation or code to refer to the accounting and auditing issues.) related to the coronavirus event with respect to accurately determining reportable amounts and disclosures of events.