We are in the midst of a national emergency. The government is offering benefits to victims; your new way of business is requiring new, unfamiliar technology; and uncertainty is driving you to new apps and websites in search of information to help you stay afloat—all of which are being seized upon as new opportunities by cybercriminals.

Criminals are scamming individuals and businesses of their money and data through a myriad of tricks. Current scams are related to:

• The IRS or CARES Act
• Stimulus Payments
• COVID-19

• Charitable giving sites
• Current updates – statistics and/or heat maps
• Early vaccine / treatment access

• Problems with a Bank Account or Credit Card
• Investment Opportunities
• Blood Donation

Here is what cybercriminals are doing:

Method 1: Masquerading
Cybercriminals are exploiting the necessity for individuals and businesses to deploy new IT resources and methods to conduct work remotely such as VPNs, screen sharing technologies, and remote meeting software. Criminals are developing malicious tools that appear legitimate. Unsuspecting users, in search of a tool to facilitate their needs, instead download a malicious VPN agent. It is important to discuss any new IT resources you are considering with a professional who can advise you not only on the best, but the most secure tools.

Also, as your business operations change, cybercriminals are waiting to involve themselves in the process. Man-in-the-middle attacks involve criminals intercepting emails detailing payment instructions and bank account numbers and re-routing them to off-shore bank accounts before forwarding the email to the recipient. The sender and recipient are none the wiser until they discover that the money is gone.

Method 2:  Phishing/Vishing/SMishing using COVID-19 themes

Attacks may come in the form of fraudulent emails (i.e., “phishing”), text messages (i.e., “smishing”) or voice calls (i.e., “vishing”). These attacks may take advantage of users by posing as the following:

1. The IRS
2. Charitable agencies
3. Tech Support

Remember, the IRS will NEVER call, text, or email you for payment or bank account information, nor will other government agencies. Scrutinize every unfamiliar call, text, or email and avoid disclosing your personal information.

Method 3: Fake Mobile Applications
Cyber criminals understand that we regularly download apps to facilitate our daily needs. There have been multiple cases of malicious Android applications claiming to offer information about the virus or to accommodate your business needs in these times of uncertainty. But all they really offer is attackers the opportunity to spy on you, steal information, or ransom your data.

Method 4: Malicious and Fraudulent Websites
The Palo Alto Networks threat intelligence team notes that over the past few weeks more than 100,000 websites have been registered containing terms like “covid,” “virus,” and “corona.” Many of these websites are used to deploy malicious software that can threaten your business operations and data security or trick you into thinking you are applying for stimulus loans through its interface. Some websites spread false information to create unnecessary action or panic. Such risks can be avoided by using only trusted sources.

Do the following to protect yourself from becoming a victim of a fraudulent attack:

• Use extreme caution when dealing with any email with a subject line, attachment or hyperlink pertaining to COVID-19.
• Be cautious when dealing with an email, text message, social media post, or phone call with a subject line or topic pertaining to a COVID-19 related matter.
• Use only TRUSTED Sources, such as known government websites, for updated information on COVID-19.
• NEVER trust a hyperlink in a communication stressing urgency, such as a warning about a severe problem pertaining to financial information—i.e. bank account, credit card or the IRS.

• Verify that the contact information is from a trusted source—for example, the toll-free phone number on the back of your credit card.

• If you visit a website, open it directly from your computer or a previously used App on your SmartPhone instead of from the requesting email.
• Never provide any identifying number over the phone, such as your Social Security number, Your Medicare ID number, your driver’s license number and your bank account number.
• If you need to implement new technology or processes for your business or personal life, consult a professional.

As the United States enters its third month of battling the uncertain times of COVID-19, businesses are faced with the challenges of operation interruptions, cash flow and revenue concerns and volatility in the stock market. Businesses must consider the financial reporting impact and the appropriate disclosure of the coronavirus disease’s effect.

Subsequent Events
Accounting standards define subsequent events as events or transactions that occur after the balance sheet date but before financial statements are issued or are available to be. There are two types of subsequent events:

1. The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements (that is, recognized subsequent events).
2. The second type consists of events that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date (that is, non-recognized subsequent events).



Based on the first reported positive cases of the disease in the United States beginning January 14, 2020 and the limited domestic economic impact prior year calendar year-end, it is likely that COVID-19-related subsequent events would be identified as non-recognized subsequent events. Disclosure of non-recognized events are intended to prevent financial statements from being misleading and require disclosure of the nature of the event and an estimate of the financial effect of the event (or a statement that an estimate cannot be made). The predominant subsequent events regarding this pandemic include a decline in the market value of debt and equity securities and the impact on business operations.

Market Value Declines
Significant declines in the stock market continue to mount amidst the worldwide struggle against COVID-19. Year-to-date the S&P 500 has declined with marginal signs of reduced volatility. That said, non-public entities generally do not explicitly disclose potential changes in the value of recognized assets due to foreseeable future risks. In its place, many entities include a standardized disclosure regarding the risk of market value declines of assets. Entities should evaluate whether an explicit disclosure regarding the decline in securities as a result of COVID-19 or a classic statement regarding risk of market value is necessary. Factors such as the significance of securities in relation to, and the liquidity of, remaining assets should be considered when making this determination.

Business Operations
Business operations have been considerably altered during this time of uncertainty. While a few industries have seen unprecedented highs, the majority of businesses have shuttered at the request or order of authorities. Although an estimated amount of the financial statement effect is likely not possible considering the uncertainty of the duration of this crisis, qualitative disclosure of such economic interruption should be contemplated as to not mislead financial statement users.

Conclusion
We will continue to follow developments and provide guidance and clarity surrounding COVID-19 reporting issues. We are only on the surface of the economic impact this devastating event has had on businesses. For business questions related to or to discuss COVID-19’s effect on your business, please contact your trusted HBK advisor.

• • Federal and State extensions for filing taxes and making payments
  • Tax credits and provisions of current and pending legislation
  • Ways to maximize cash availability
  • Access to Small Business Association (SBA) loans

The COVID-19 crisis is affecting many businesses. Some have been forced to close temporarily or alter operations, while others are facing less consumer traffic or demand. No matter the cause, an unexpected downturn in revenue can result in a cash shortage. As it is unknown how long COVID-19 will affect businesses and demand, it is critical that all business owners and finance executives understand their cash position. The following tips will help you manage your business’s cash:

1. Negotiate with Vendors. Many companies are facing cash struggles or looking to preserve cash due to the current uncertainty in the business climate. However, communicating is critical, especially if you are unable to make a payment on time. Contact your vendors, and ask whether there are options to extend payment due dates. Be creative. Offer to pay a portion of your bill, if you are able, with the balance to be paid at a later date. While some vendors may not be able to accommodate your request, others may be able to help you, at least temporarily. If you cannot pay your bills, ask your vendors if there are other things you can do to stay in good standing. Stay in touch with your legal counsel if you are unable to pay your bills or other debts.
2. Communicate with Customers. Like with your vendors, communicate with your customers. If feasible, offer temporary discounts for paying quickly or even within their regular payment terms. Determine if your method of sending invoices is most efficient for the customer; perhaps customers receiving invoices by mail can receive them electronically, which will expedite payment. Check on any overdue payments promptly, and work with customers to find win-win payment options that allow you to manage your cash comfortably while also helping your customers. This may help build customer loyalty, which will pay off in the future.
3. Reduce Expenses. As in any time of economic hardship, a business must identify costs that can be reduced. Study your expenses. Determine what can be cut back or eliminated. For example:
   • Think about getting rid of the community water cooler, which would both save the company money and eliminate potential gatherings of workers in a small area.
   • Consider price shopping goods or supplies with other vendors. But before moving your business, negotiate with current vendors to give them a chance to retain your business, which is likely important to them, especially during this crisis.
   • Talk with insurance brokers or service providers to determine if changes in your business can help reduce your costs. Insurance policies, software licenses, and training programs are three areas that may use your sales, profit, or headcount to determine your fee.
   • Encourage co-workers to act conscientiously, ensuring efficient use of supplies, materials, and other goods. If able, offer to share some of the cost savings with employees who generate unique ideas.
4. Sell Unused Assets. Do you have assets not in use, such as obsolete inventory, scrap raw materials, aged equipment, or office furniture? You might be able to sell them to raise cash. Consider contacting vendors or competitors who may have a supply shortage and need the items. Think creatively as to who may have a need for your unusable items. If you are looking to preserve cash long term, consider donating unused items you cannot sell to obtain a possible tax deduction.
5. Use Your Line of Credit. Do you have a line of credit you aren’t accessing? Consider drawing funds to help alleviate current working capital constraints. Also, if bank funds are available to you, stay in touch with your banking contact regarding the bank’s plans during a shelter in place or quarantine order. You might consider drawing excess funds to ensure you have adequate cash in case orders affect your access to your line of credit.
6. Loans. If you cannot raise enough cash from your business to support your ongoing needs, seek alternative funding arrangements. Talk with your bankers, other lenders, or local or state government agencies about funding availability. The U.S. Small Business Administration is offering loans to help businesses in approved areas that are short on working capital due to COVID-19. More information about this program can be found at SBA.gov/disaster.
7. Network…from a Distance. Do not allow social distancing to separate you from your network. Stay in touch with your key advisors and business contacts. Instead of meeting for coffee or lunch, schedule video calls and share a drink or meal together virtually. Talk about challenges for your business. In strong economic times, networking is powerful; in challenging times, networking can be powerful as well. Your contacts may have resources that can help you navigate the challenges you face, including options to improve your working capital.
8. Plan Your Cash. Create a rolling cash forecast. Consider forecasting weekly cash availability for a minimum of the next two to three months, but ideally for the next six months or longer. Evaluate whether your cash position will remain adequate or whether there will be challenges to overcome. You can use cash forecasting to evaluate potentially damaging scenarios, such as a major customer delaying payment. Update your forecast frequently and ensure it reflects your current position. If you are uncomfortable or inexperienced in forecasting cash availability, engage the advice of your financial advisor to ensure your plan provides the information you will need.

We invite you to contact us with your questions or concerns about cash management.

• Assess your exposure areas. How reliable is your current supply chain, your orders for inventory or supplies? Even if your current suppliers look dependable, it is good to identify alternative sources for the products and services you need to do business effectively.
• Examine your sales forecast and cash flow projections. Develop the worst case, best case and expected scenarios, and develop strategies for operating under each.
• Consider your strategic initiatives and how you will continue to make progress toward achieving those most important objectives. What can you do to alleviate issues that might arise in this environment that could prevent you from reaching those goals?
• Cost-containment is imperative. Evaluate the risks inherent in your fixed and variable costs. How will you prioritize cuts if you need to make them?
• Determine your minimum staffing requirements. Identify those who are most critical to your business. While you’d like to keep everyone, you might not be able to. Don’t be short-sighted. This environment will eventually turnaround, and you’ll need to have your key employees onboard to propel your recovery.
• Keep aware of Federal and state law changes that can benefit your business. For example, President Trump just signed into law the Families First Coronavirus Response Bill that would provide significant relief through refundable tax credits for paid sick, family and medical leave. Additionally, states are considering incentives to assist businesses dealing with the disruption and uncertainty caused by the coronavirus. HBK will provide updates on these Federal and state relief efforts.
• Maintain open communications, with your employees but also externally with your customers and suppliers. Be proactive if there are going to be problems, such as late deliveries. Communication is the key to keeping customers satisfied that you are doing the best you can to address their needs.
• Talk to your bankers about access to more resources, like a bigger credit line, to help you through a less than ideal business climate. If you have existing bank debt or loan covenants, and anticipate missing a payment, talk with your banker early on rather than at your reporting deadline. Bankers hopefully will be sensitive to these difficulties.
• Talk with your HBK advisor for recommendations on mitigating your business risks. The good times of the past years might have hidden some inefficiencies that we can help you address the current business environment and be prepared for recovery.