CFOs worry coronavirus may lead to global downturn

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Virtually every CFO is seeing some impact from the coronavirus, and more than half see the potential for a significant impact on their business operations, according to a new survey from PricewaterhouseCoopers.

PwC’s COVID-19 CFO Pulse Survey polled 50 finance leaders about how the novel coronavirus is affecting their companies. The potential for COVID-19 to lead to a global economic downturn is the top concern of finance leaders in the U.S. and Mexico. All of the CFOs and finance leaders surveyed said their business is experiencing some impact as a result of coronavirus. However, 90 percent of the finance leaders polled said their business would return to normal in less than three months if COVID-19 were to end immediately, which seems unlikely as the pandemic continues to spread around the world.

More than half (54 percent) of the survey respondents said the outbreak has the potential to make a “significant” impact on their business operations, and 58 percent anticipate a decrease in their company’s revenue and/or profits this year. Over a third (34 percent) said the impact has been limited to specific regions, but they’re monitoring developments closely.

Fourteen percent of the finance leaders polled indicated their company isn’t considering any financial actions as a result of COVID-19. Only 30 percent said they are considering supply chain changes.

Many are concerned about a recession, as the Dow Jones Industrial Average plummeted 2,997 points on Monday. Eighty percent of the respondents indicated that a potential global recession rated among their top three concerns about COVID-19. Nearly half (48 percent) of finance leaders expect to change their companies’ disclosures as a result.

“It goes without saying that we are dealing with unprecedented times,” said PwC US chair and senior partner Tim Ryan during a conference call with reporters Monday. “The reality is that none of us know quite where this is going to go. When we look at the lessons learned from other parts of the globe, such as China, it is reasonable for us to expect that this will be with us for several months. In terms of what we are hearing from other executives as we talk with them and meet with them on a regular basis, I am encouraged and inspired by the fact that almost everybody we talk to and we’re working with is putting the health and welfare of their employees first, and the measures their companies are taking on a daily basis to make sure of the health and welfare of employees and customers is coming first.”

He was asked by Accounting Today about how accounting firms like PwC are faring, and whether the travel restrictions are affecting the firm’s auditors and accountants, and if he thinks the tax deadline will be extended next month.

“Without a doubt, it is affecting us quite a bit,” said Ryan. “For us, like every other CEO we talk to and company we talk to, the health and wellbeing of our employees is first and foremost paramount. Where we are at this point is over the last several weeks we’re not traveling in restricted areas outside the United States. We’re now at the point where we are locked down. We’ve closed our offices. We have asked our employees to work from home. We’ve asked our employees not to visit clients unless it’s absolutely necessary, and that requires an approval to do that because we don’t want to put our employees in harm’s way."

(A PwC spokesman later clarified after this story was posted that the firm is not technically on "lockdown.")

"Frankly, because of the investments we have made over the last several years, we are very well equipped to work from home and have our people work remotely," Ryan continued. "Flexibility is a big part of our culture, so our people are used to working in teams and remotely at this point. So we feel very confident in our ability to meet our clients’ needs, and we’re working with our clients to make sure they can leverage, understand and benefit from our investments. What I mean is the lessons learned and the things we have done in the past. So I feel good about our ability to serve our clients and take care of our people at this point.”

He also shared some of what he had heard about the tax deadline being extended, noting that discussions are underway with the tax authorities, as they are with the Securities and Exchange Commission about corporate filing deadlines. “Those dialogues are happening at this point,” he said. “It’s similar to the financial reporting deadline question. The dialogue with the policymakers at the SEC is they’re asking what we’ve heard from clients at this point, and if there is an urgent need to do that, I suspect we’ll get the right reaction out of Washington.”

PwC plans to update its survey on a bimonthly basis to keep track of the impact of coronavirus on companies and to see how CFO sentiment changes, according to Amity Millhiser, PwC US vice chair and chief clients officer. “As Tim said, companies are putting in place unprecedented measures to slow the spread of the virus and we are likely to continue to see the impacts on financial performance broadly across every sector and across every geography,” she said during the conference call. “In fact, almost all companies anticipated taking financial actions as a result of COVID-19.”

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