It is now acquired the awareness that in the anti-crisis provisions of the Government the “immediate liquidity” formula was fine at the beginning of April as a response to the initial emergency phase, but that many other measures are needed, several of which are already underway.
That formula proved to be not easy to apply and did not arouse the expected positive reaction from the conferring bodies (due to "banking bureaucracy", Dario Di Vico, 20 April) and from the recipients of the funds ("few requests", says the CGIA of Mestre on 2 May).
Furthermore Bank of Italy estimates 10% of non-refunds predicting a "significant impact" on public finances, while others beg for "real money (and not debt)" or "non-repayable contributions" as other countries have done.
The problem is clear: replace the shortfall in cash from the collapse of revenues with short-term debt, albeit guaranteed by the State (which in any case will want it back), removes the centrality of the economic dimension of business management, the true center of gravity of the enterprise system.
The Accounting/Business Economics group of the "Marco Fanno" Department of Economics and Business of the University of Padua had raised this priority on March 31, forwarding the proposal to the Presidency of the Council of change the accounting rules to allow enterprises to consider how investments the "irrepressible and non-recurring costs" due to the crisis of Covid 19 and supported to ensure continuity of economic activity. In essence, the proposal asks to treat this type of extraordinary costs as "intangible fixed assets" to be amortized over several years with the benefit of the economic balance and the level of the companies' own capital.
A technical proposal within a conscious design discourse, also brought to the level of European Accounting Association on April 6 with the note “How the European Accounting Research Community can contribute to overcome the crisis” forwarded by Amedeo Pugliese.
On the basis of some simulations conducted on alternative hypotheses relating to the 2020 financial statements of joint-stock companies - from which a strong negative impact emerges on the net income and equity capital of the companies, suggesting the consequent bankruptcies or the entry of speculative or criminal investors – the group also proposed to temporarily suspend the accounting standards relating to the determination of the value of tangible, intangible (impairment test) and financial (fair value and mark-to-market) assets in order to have by 2020 budgets more consistent with the actual situation, hopefully temporary, due to the negative economic context.
Nicola Bedin's proposal also moves along a similar line (The Sun 24 hours, 3rd April, MF 30 April) which proposes to allow companies not to carry out depreciation in 2020 in order to reduce the number of loss-making companies with negative equity capital.
It would be in this case too a solution at no cost to the State.
In truth, Legislative Decree 23 of 8 April paid initial attention to the issues of business crisis and business continuity by adopting a "cold approach" with the postponement of the entry into force of the Code of business crisis and insolvency to 1 September 2021 and neutralizing ex ante by legal means the effects of the legislation in force on the lack of business continuity while leaving the law unchanged.
The latter solution which does not offer a certain, or at least less uncertain, time to companies, poses problems already at the time of closing the 2020 financial statements and does not relieve administrators and statutory auditors from serious risks.
Consistent with this approach, the interpretative attention launched on 28 April by the Italian Accounting Organization (OIC) on Legislative Decree no. 23 is developing these days necessarily more on the application side than on the non-evaluative side.
The National Foundation of Accountants (FNC) together with the Italian Society of Accounting and Business Economics Teachers (SIDREA) on April 21 in the document "The impact of the health emergency on business continuity and on the application of national accounting standards, first indications" shows a prudent and conservative line. In fact, he says that “It does not appear, however, necessary to “modify” the principles or propose accounting solutions and following the best practices; rather, it is sufficient toImplement an interpretative path to apply the principles in the light of a peculiar phenomenon. "
The same National Council of Chartered Accountants (CNDC), on April 25, in the amendments proposed in the hearing to the Finance and Productive Activities Commission in the Chamber on Decree Law no. 23, does not touch on the issue of accounting principles but asks, among other things, a rule to avoid filing for bankruptcy until 1 September 2021 if the state of insolvency is linked to the health crisis and another that exempts directors and mayors from liability in relation to the damage caused by the pandemic.
A complex picture therefore, of awareness and prudence, certainly in the making, which however clashes with the very tight deadlines imposed by the crisis.
The scenarios described in the Def of a fall in GDP under normal (-9%) or negative (-10,6%) conditions, of the country's debt, a fall in the income of employees (-5,7%), a drop in consumption (-7,2%) and gross fixed investments (-12,3%), as well as exports and imports are worrying and show the the need for decidedly original and innovative measures, up to the gravity of the historical situation.
Several sources move along this line: the Scandizzo and Tria proposal on a "non-repayable intervention to compensate the State for companies" commensurate with the decline in company added value caused by Covic-19, the Assonime proposal for a "new fund (of 20-25 billion) for the recapitalization of Italian companies" (non-financial companies with turnover between 25 million and 5 billion or more than 50 employees), the project of the Interuniversity Research Center on Public Economy (CRIEP) of an extraordinary recapitalization fund and restructuring of SMEs and others. Well, integrate the simulations that underlie these proposals with assessments of the impact of changes in accounting principles on company financial statements so that company lawyers and accountants are offered the correct references for effective changes.
Among other things, there is no shortage of precedents for state amendments to accounting principles in exceptional conditions or for specific objectives in Italy and Europe (think, for example, of the MF of 1 May, in the case of the evolution of the valuation of derivative financial products or the devaluation accountant of players on the balance sheet assets of football clubs after the Bosman law; or to the changes imposed in 2014 and 2017 by Commissioner Nouy to the classification and value of net loans in banks' balance sheets in order to stabilize the banking system).
So it has to be searched a solution to the complex problems generated by the health emergency that you also pass throughaccounting principles appropriate to the historical moment” and which requires a fruitful dialogue between corporate accounting, corporate jurisprudence, industrial economics and finance science. The latter could be a further opportunity offered by the Covid-19 crisis.
°°° The group from the University of Padua that elaborated the proposal for the Presidency of the Council is also made up of Giacomo Boesso, Fabrizio Cerbioni, Michele Fabrizi, Andrea Menini, Antonio Parbonetti, Emilio Passetti, Silvia Pilonato, Amedeo Pugliese.
