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Impact of the Russian invasion of Ukraine

The news over the past few days has shown worrying and heart-breaking images from Ukraine. One consideration is how the conflict impacts firms and their clients. Many of us will be lucky enough not to be directly affected. However, the following should be considered:

Anti-Money Laundering Considerations and Financial Sanctions

The UK Government has reacted with a significant range of sanctions against Russian businesses and individuals. In a useful ICAEW article, it is highlighted that:

  • Firms holding client money must ensure that funds in their accounts do not relate to any individual or business where sanctions have been imposed; and
  • Firms should consider the current financial sanctions when updating AML client due diligence. More immediately, the known or suspected introduction of sanctions impacting a client or their beneficial owners should trigger the formal review of existing client due diligence.

Assessment of Going concern

Where a client has substantial trade with Ukraine or Russia, the impact of war and any consequential sanctions must be included in any assessment of going concern.

Other financial reporting considerations

The conflict will be a non-adjusting subsequent event for any period-end prior February 2022. Where the client has, or is expected to be materially impacted by the conflict whether directly or indirectly a subsequent events note should be included. The financial statements will only require adjustment, for example through impairment of assets for accounting periods directly impacted by the conflict, this will typically be periods ending 28 February 2022 onwards.

For further advice please contact our helpline.

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