Impact of COVID-19 on Impairment Analysis

Impact of COVID-19 on Impairment Analysis

Drastic changes in operating conditions and financial markets this year pose significant challenges for all of us involved in financial reporting and forecasting.

These challenges are illustrated by Prime Minister Scott Morrison’s announcement of a five-month delay in handing down the Federal Budget, due to the difficulty in preparing forecasts. Unfortunately, many of us will need to complete budgets, forecasts and impairment testing before life returns to normal.

For any company that has made an acquisition in the last few years, impairment analysis will require deeper consideration and will likely receive greater scrutiny from auditors and ASIC than in prior years.

It is likely that many businesses will experience a reduction in forecast cashflows coupled with increased uncertainty (i.e. an increase in discount rates). This is likely to result in reductions in headroom or impairment of assets.  In some cases, these impacts will be significant.

The challenge for companies is how to risk adjust your forecasts (which may include multiple scenarios) and re-assess your discount rate, in an appropriate manner, and without double counting the expected impacts or valuation inputs.


We have collated the following resources to assist you in undertaking your impairment testing analysis:

As always, we suggest early communication with and involvement of the directors of your company.

Contact us for questions

If you have any questions with this or any other valuation issue, please contact the Leadenhall team. You can email or call 1800 355 778.


Discount Rate 31 Dec 2023

Market Discount Rates – 31 December 2023

Optimism around the easing of inflation and potential interest rate cuts led to a rally in equity markets towards the end of December 2023. With markets continuing to fluctuate significantly, the selection of a reasonable discount rate remains a key consideration, whether for the purpose of financial reporting or for any valuation analysis.

Discount rate September 2023


Markets have declined over the last quarter as persistent inflation and the potential for further rate rises continue to weigh on the ASX 200. These fears have seen a rapid increase in government bond yields over the last month. With market conditions continuing to evolve rapidly, we have provided an update on our assessment of discount rates as at 30 September 2023.

Simon Dalgarno celebrates 25 years

25 Years at Leadenhall: Simon Dalgarno celebrates

After 25 years at Leadenhall (and in the valuation profession) Simon Dalgarno was lucky enough to have the entire month of May off as leave. During his time off, he went on a pilgrimage – which was both professional and personal.