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The global economy has already suffered some consequences of Covid-19. Markets have sputtered, companies have closed and entire industries are set for long-term downturns. IMA’s Raef Lawson looks at how accountants can manage the crisis

In times of turbulence like these, management accountants are ideally positioned to use their operational, strategic, financial and analytical skills in the areas of their core competency to help their organisations weather the current economic storm.

The sudden – and in many cases devastating – impact on companies has many organisations scrambling for survival. Finance teams, with their holistic view of their organisations’ operations, are well placed to assess how their organisation’s performance will be impacted by the pandemic. Utilising this knowledge, they can work with those in other functional areas to ensure their organisations’ survival.

A key step for many organisations is assessing, based on cash flows, how long the company can operate. Plans can then be put in place on how to cut costs and conserve cash. Management accountants can help their companies by evaluating insurance documents and contracts with suppliers, customers, landlords, lenders and other relevant parties for opportunities in these areas. They can also help evaluate their companies’ employment situations, which may challenge available resources, and government assistance programmes to help support employees until the economy recovers.

Supply Chain Management 

A key aspect of operations is supply chain management, an area in which CFOs have become more involved in recent years.

The outbreak of Covid-19 has amplified the need for finance executives to intimately understand their company’s supply chain. There are inherent risks in entering into relationships with suppliers, given the external pressures that have the potential to disrupt business flow across any of the links within the chain. Many CFOs have a strong understanding of the risks associated with their primary suppliers, but the Covid-19 pandemic is illustrating the need for a deeper and more comprehensive understanding of the full supply chain.

For example, an aerospace manufacturer may know that its engines come from a supplier in a country largely unaffected by the virus, but it may not know that that supplier sources engine parts from a company that has shut down operations due to the virus. Though only a single link is broken, the lack of parts can disrupt the full supply chain.

Sourcing materials and products from only one or a few regions can leave supply chains vulnerable to long-term damage. CFOs need to help ensure that crises like Covid-19 will have a minimal effect on their supply chain, and that sufficient contingency plans are in place to ensure business continuity when the supply chain is disrupted.

Enterprise Risk Management 

The Covid-19 pandemic illustrates the importance of developing and implementing sound enterprise risk management (ERM) plans to address crises that have the potential to disrupt business processes and endanger employees. CFOs and other finance professionals increasingly lead or help develop their companies’ efforts in this area.

Maintaining a strong ERM plan is the result of coordination between various departments within an organisation. The finance function, by working with operations, human resources and a host of other teams, can help make sure their company is well positioned to ensure continuous operations.


Management accountants are at the forefront of the financial reporting process and, given the increased scrutiny that will accompany first-quarter earnings reports this year, it is essential for their company’s communications to clearly disclose the impact of Covid-19. This is complicated by the need for CFOs to provide financial guidance for a future that remains very uncertain.

Management accountants will need to determine and communicate whether the impacts from the Covid-19 pandemic are short term, with a likelihood of a rebound and losses recoupable, or whether the impact will be long term.

For example, technology companies are likely to see losses due to manufacturing and supply concerns, but consumption is likely to rebound, while in the hospitality industry, losses are being incurred that will not be recoupable and are likely to continue to be so for a fairly long term.

Management accountants need to be concerned about operations, supply chain management, ERM, financial reporting and other considerations in these times of economic distress and uncertainty.

For many businesses, Covid-19 will bring about change within the organisation, and finance professionals may find that they are charged with leading these changes. A structured approach to organisational change management is outlined in IMA’s Statement on Management Accounting (SMA) Managing Organizational Change in Operational Change Initiatives.

By utilising the competencies described above, management accountants can serve a key role in helping their organisations survive the current economic crisis.

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