Inflation has been increasing at rates not seen in decades. These increases have real effects on prices, which has resulted in new challenges and financial reporting considerations for entities. Volatile markets and customer demands make predicting future cash flows difficult and rising costs could reduce profit margins. In addition, supply chains continue to experience pressure as key suppliers experience significant backlogs due to the lingering effects of COVID-19, labor shortages, increases in delivery costs, government regulation and geopolitical issues like Russia’s war in Ukraine, as well as tension between the U.S. and China. With all this going on, it is important that entities carefully evaluate the accounting and reporting implications of all the issues and challenges of the current environment.
Our whitepaper, Financial Reporting Considerations in an Environment of inflation and Rising Interest Rates, highlights some matters for management and those charged with governance to consider in the upcoming reporting season.