AMID the massive uncertainty triggered by the coronavirus a new term has been coined that could set alarm bells ringing among critics of the multi-billion accountancy industry.

EBITDAC adds one letter to the conventional Earnings Before Interest, Depreciation and Amortisation measure which shows what trading profit or loss a firm has made in cash terms.

The “C” that some are adding now stands for coronavirus.

Companies in the US and Germany are reported to have used EBITDAC in recent weeks to try to strip out the effect of lockdowns on their trading results to give a better idea of their underlying performance.

As we obviously live in exceptional times one can understand why companies might want to argue that accounts based on standard measures might not tell the whole story.

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But coming up with numbers that could be expected to fairly reflect the impact of the coronavirus will be incredibly tough.

The fallout from the pandemic will last for years and it will take some time for the impact on businesses around the world to become clear.

Against that backdrop there will be concern in some quarters that efforts to come up with EBITDAC type measures could generate a fee bonanza for accountancy giants, which have been making massive profits in recent years.

The profession entered the latest downturn already engaged in an effort to restore its reputation after confidence in the value of the audits that provide a lucrative source of income for firms waned.

The sight of banking giants RBS and the former Halifax Bank of Scotland requiring multi-billion taxpayer bailouts during the 2008 financial crisis after receiving clean audit reports left many wondering what was the point of the checks completed on their accounts.

The auditors concerned, Deloitte and KPMG, fulfilled their legal obligations but the saga did nothing to help accountants to persuade people they deserve the huge fees they insist their expertise justifies.

The reporting regime has been beefed up in recent years with the introduction of the requirement for accounts to include audited strategic reports that highlight significant risks firms may face.

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However accountancy giants have faced questions regarding their work in connection with a string of big firms that collapsed.

PwC was fined £6.5 million by the Financial Reporting Council in 2018 in connection with its work on the accounts of BHS.

KPMG and EY are are under investigation by the accounting watchdog for their work on the accounts of Carillion and Thomas Cook respectively.

Accountancy firms must ensure that the way they respond to the challenges posed by the coronavirus helps them to win back some of the goodwill lost in recent years.

A range of stakeholders that includes investors, lenders, employees and taxpayers will rely on the accounts that companies produce.

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Accountants will face huge challenges in helping ensure that those statements do fairly reflect the underlying realities of their businesses.

This will require them to ask the right questions and exercise difficult judgements, particularly about the valuations of assets that are carried on companies’ balance sheets.

The going concern status of thousands of firms may be in question.

It will be difficult for firms to complete robust audit work while social distancing and other restrictions associated with lockdowns are in place.

The fact that the Government and Financial Conduct Authority have given firms more time to make the required filings will take some of the pressure off.

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But if accountancy firms really want to win friends it can not be business as usual on the fees front. The Big Four giants have been able to charge fees that have allowed the average partner to earn hundreds of thousands of pounds a year.

At a time when so many businesses are struggling accountancy and law firms alike must recognise fee levels they could charge in better times could impose intolerable strains on firms.If they don’t respond appropriately calls for the Government to take control of audit work may get louder.