COVID-19 pandemic

Posted: August 27th, 2021

Reflective Essay

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Reflective Essay

The COVID-19 pandemic has emerged as a health problem and an economic concern that affects both enterprises and entrepreneurs. The health crisis has affected the economy and slowed its progress, affecting various aspects of a business. Powell (2020) thinks that the economic downturn instigated by COVID-19 could be the greatest in history and estimates that the financial cost of the crisis could be as high as $16 trillion because of various initiatives introduced at the state and federal levels, seeking to test, trace, and treat COVID-19 patients. The government now focuses on alleviating the health situation while shielding the economy from collapsing. For instance, the government improves liquidity, which has also reduced significantly following the closure of the initiative. Evidence by Powell (2020) shows the cost the United States has used to mitigate the effects of the health crisis surpasses the amount it has used in handling Afghanistan, Syria, and Iran wars put together to illustrate the severe effects of the calamity. The most substantial cost has shifted to businesses, seriously disrupting operations. Consequently, the high cost introduced by the present health crisis has affected business activities while adding certain uncertainties, compelling corporations to prepare and release misleading financial results. My perception has changed regarding the effects of COVID-19, especially in the business world, including its impact on financial processes. My analysis of the available sources on pandemic has changed my vision of how businesses react to situations that threaten their financial stability and what change has happened due to constant research from various sources and interaction with different competent individuals. 

Changes That Occurred in Students’ Understanding

I have learned that businesses give misguiding financial reports to maintain a positive reputation about their operations, which contravenes legal requirements and ethical guidelines. Writing the report expanded my knowledge about how the health crisis forced many establishments, especially the hospitality sector, to discontinue their operations. I have gained a wider view of how containment measures introduced by the government, including maintaining social distance, washing hands regularly, isolating, sanitizing, and reading body temperatures, placed additional costs on businesses, which increased the risk for experiencing financial problems. However, the study shows me how corporations were compelled to use accounting cosmetics. In this process, financial experts utilize their skills and competences in accounting to alter the figures relayed in an organization’s accounts.

I never knew that companies would give an appealing impression of their financial performance to stakeholders and sustain their competitiveness through deceit. Trentmann and Eaglesham (2021) give an example of Ulta Beauty, as American multi-chain beauty store had to use accounting cosmetics to give a positive impression of its financial performance despite having performed considerably poorly due to the pandemic. The company’s losses within a short time made the chain use the unethical and unlawful approach to keep its stakeholders close and hopeful. The option was noticed soon because the Securities and Exchange Commission (SEC) became aware of companies’ methods to furnish their financial results (Dunn, 2020). I have reconsidered some of the assumptions I held at the start of the research that companies might want to truly reflect on their financial performance after failing to receive support from different stakeholders. 

How Changes Occurred

After completing the research, some changes happened, but they did not appear abruptly but rather through a series of practices. I had to interact with several relevant literary sources that could give pertinent information on the topic. Secondary sources equipped me with valuable content about how companies reacted to the effects of COVID-19, especially concerning reporting financial outcomes. However, I had to be selective when choosing the appropriate literature to ensure I get the adequate content. I spent time sampling sources from various databases before settling on those that could give adequate guidance on the subject under investigation. I reviewed information available online and offline, comparing various perspectives and analyzing my own vision of the situation.

The change occurred through active interaction with different people who inspired me to proceed with the research. My tutors played vital roles in facilitating the change because they allowed me to conduct research that would inform me about how companies deliver their financial reports after undergoing a major catastrophe that can distort business operations and worsen financial outcomes. Fellow learners also played vital roles in fostering the change that I now regard as instrumental in perceiving and analyzing financial reports. Other students encouraged me to continue the research because they put much effort into their assignments. Therefore, I would attribute the chance to both personal effort and influence from external parties. The change did not happen suddenly because I took time to analyze the information and influence I received from other parties to understand their impact. I shifted my perspective with every new message that I received, changing my view of the pandemic and its financial impact at local, state, and federal levels.

Conclusion

Completing the assignment changed my perception about how businesses present their financial performance after witnessing a significant setback following an economic crisis. The project informs that companies would exaggerate their performance even after performing poorly to create a strong image about their operations to stakeholders. Even though the approach may make the company look competitive and appealing to stakeholders, I have learned that the practice is unlawful and contrary to ethical requirements. The awareness will influence my future decisions about financial reports companies reveal after undergoing challenges that after them over a lengthy period. I would be tempted to conduct a thorough audit of the report to determine whether the organization uses cosmetic accounting to fabricate results. I would be tempted to compare audits from different institutions before determining the credibility of the released report. Otherwise, it may be difficult for me to believe what companies reveal as financial performance after undergoing significant challenges such as COVID-19. The lesson about interpreting current events from experience is never to trust a financial report before verifying all information are true and not prone to manipulation. The experience also informs about the need to maintain credibility to avoid possible confrontations with legal authorities such as the SEC that are charged with ensuring credibility. The experiences by various companies that have tried cosmetic accounting show that as much as a company may want to fabricate its reports, the attempt can hardly go unnoticed, causing the company more problems. The research is worthwhile because it reminds organizations to be ready to go through difficult times such as COVID-19 that could emerge in future. More fundamentally, the research is valuable because it reminds operators of the importance of transparency and credibility when delivering financial reports.

References

Dunn, G. (2020). SEC brings first enforcement action against a public company for misleading disclosures about the financial impacts of the pandemic. Retrieved 6 August, 2021, from https://www.gibsondunn.com/sec-brings-first-enforcement-action-against-a-public-company-for-misleading-disclosures-about-the-financial-impacts-of-the-pandemic/

Powell, A. (2020, November 10). What might COVID cost the U.S.? Try $16 trillion. The Harvard Gazette. https://news.harvard.edu/gazette/story/2020/11/what-might-covid-cost-the-u-s-experts-eye-16-trillion/

Trentmann, N., & Eaglesham, J. (2021, February 23). Companies put the best face on COVID-19’s financial impact. The Wall Street Journal. https://www.wsj.com/articles/companies-put-the-best-face-on-covid-19s-financial-impact-11614076201