Navigating IFRS Financial Reporting and Disclosure Obligations After Hurricane Melissa in Jamaica
- Kevon McIntosh, CPA, CA
- 6 days ago
- 10 min read
Hurricane Melissa’s landfall on Jamaica on October 28, 2025 marked the most powerful storm in the island’s recorded history. With sustained winds of 185 mph, it left behind destroyed homes, damaged hotels and factories, compromised infrastructure, and businesses struggling to reopen. Alongside the human and operational impact, companies now face another critical task: telling a truthful, clear and compliant financial story under IFRS post-disaster reporting requirements.
The questions now comes up, what are the key financial reporting and disclosure issues that entities must address after Hurricane Melissa under International Financial Reporting Standards (IFRS) and local regulatory expectations?
In the weeks and months after Melissa, businesses are focused on survival and recovery: clearing debris, reopening locations, supporting staff, and dealing with insurers, banks and government agencies. At the same time, their financial statements must now reflect a radically changed reality.
Accurate and transparent reporting matters because:
Investors and lenders are deciding whether to provide new capital or extend credit.
Regulators and the Jamaica Stock Exchange (JSE) expect timely, fair disclosure of material impacts.
Employees, suppliers and communities are looking for signals of stability and long term viability.
IFRS, provides the framework for how to account for disaster related losses and uncertainties. Local regulators, including the Financial Services Commission, Bank of Jamaica and the JSE, impose specific Jamaica financial disclosure requirements that emphasise timing and transparency. Even where relief measures, filing extensions or regulatory forbearance are granted, companies remain responsible for ensuring their financial statements capture the full financial effect of Hurricane Melissa.
In practice, most post disaster reporting issues boil down to a handful of core questions:
Can the business realistically continue operating as a going concern?
What assets and inventory have been damaged, destroyed or impaired, and by how much?
What losses must be recognised now, even if insurance or government assistance may come later?
How has credit risk changed for loans and receivables, and what extra provisions are needed?
What new obligations and onerous contracts have emerged from the disaster?
What relief is available from insurers and government, and when can it be recognised?
How will all of this be explained clearly in the financial statements and accompanying reports?
Going Concern and Liquidity – Can the Business Survive?
Going concern is the assumption that a company will continue trading for at least 12 months after the reporting date. Every entity must undertake a robust going concern assessment hurricane scenario to evaluate operational viability and liquidity risk. Under IAS 1, management must assess this assumption and disclose any material uncertainty that casts significant doubt on the company’s ability to continue operating.
After Hurricane Melissa, each company should honestly evaluate:
Cash and profitability: How long can the business cover payroll, rent, debt service and essential costs given the loss of revenue and the cost of repairs?
Financing access: Are banks, investors or shareholders willing and able to provide bridge finance or new capital?
Dependence on key suppliers and customers: Can operations resume if counterparties in heavily damaged regions are unable to restart quickly?
Reliance on insurance or grants: Is the company depending on uncertain insurance payouts or government assistance to remain solvent?
If significant doubt exists but management has a realistic recovery plan, the financial statements are still prepared on a going concern basis, but the uncertainty and mitigation plans must be clearly disclosed. Only where there is no credible path forward would a non going concern basis be used, which is rare and typically linked to insolvency.
The key for boards and management is simple: do not pretend everything is fine if it is not. It is better to acknowledge the risk and explain how it is being managed than to hide problems that will eventually surface.
Asset Impairment and Inventory Losses – Recognising the Damage
Hurricane Melissa will have triggered impairment for many assets, especially in tourism, retail, agriculture, manufacturing and infrastructure.
1. Property, plant and equipment
As businesses begin assessments, asset impairment after Hurricane Melissa becomes a critical focus under IAS 36 and IAS 16:
Write off assets that are destroyed or beyond economic repair. These are derecognised from the balance sheet and any remaining book value is recorded as a loss.
Test partially damaged assets for impairment. If the asset will generate lower future cash flows due to downtime, reduced capacity or higher running costs, its carrying amount may need to be written down to its recoverable amount.
Consider goodwill and other intangible assets. If a cash generating unit, such as a hotel or tour operation, has materially weaker prospects after the hurricane, related goodwill or intangibles may be impaired.
Impairment is assessed under IAS 36, while derecognition of destroyed PPE and recognition of insurance compensation follow IAS 16.
2. Inventory
IAS 2 requires inventory to be measured at the lower of cost and net realisable value. After Melissa, that means:
Spoiled or water damaged goods are written down to zero or scrap value.
Perishables lost due to power cuts are fully expensed.
Any write down is recognised in profit or loss in the period of the hurricane.
These losses must be recognised even if the inventory or assets were insured. Insurance is treated separately and is not an excuse to postpone or reduce impairment.
Insurance Recoveries – Recognise Only When Virtually Certain
Most medium and large businesses in Jamaica will be filing insurance claims for property damage, contents, and in some cases business interruption. The temptation is to assume that “insurance will cover it” and soften the blow in the financial statements. IFRS does not allow this. Under insurance recoveries IFRS principles, losses must be recognised immediately, with claims recorded only when virtually certain.
Under IAS 37 and IAS 16:
Losses are recognised in full as soon as they occur, without offsetting expected insurance.
An insurance receivable is recognised only when receipt is virtually certain – typically after the insurer has accepted the claim and agreed the amount.
Insurance proceeds are recorded in profit or loss, usually as other income, in the period they become receivable.
Losses and recoveries are presented separately, so users can see the gross impact of the hurricane and the relief from insurance.
In practice, this creates timing mismatches. A company may show a large impairment loss in 2025, and only record the related insurance income in 2026 when claims are settled. Clear note disclosure is therefore critical to help readers understand what has happened and what is expected.
Expected Credit Losses – Reassessing Receivables and Loans
For banks, credit unions and other lenders, Hurricane Melissa is primarily a credit risk event. Under IFRS 9, expected credit losses (ECL) must be measured using forward looking information, not just historical defaults.
Key implications include:
Significant increase in credit risk for borrowers in severely affected areas, or for businesses whose main customers or suppliers are in those areas.
Movement of many exposures from Stage 1 to Stage 2 or Stage 3, resulting in lifetime ECL instead of 12 month ECL.
Higher loss given default where collateral, such as houses or equipment, has been damaged or destroyed.
Accounting for loan moratoria and concessions as modifications, which may create additional losses.
Non financial corporates also need to revisit their trade receivables. Customers whose premises were destroyed or whose cash flows have collapsed may not pay. Under IFRS 9, lifetime ECL applies to trade receivables, and post Melissa provision rates will likely need to increase for affected customer groups.
Banks and corporates should disclose:
The nature and scale of ECL increases.
Any portfolio overlays used to address hurricane related risk.
Qualitative information about support measures, such as payment holidays, and how they have been reflected in the numbers.
If a company applied cash-flow hedge accounting under IFRS 9 and the forecast transaction is no longer expected to occur because operations have ceased or demand has collapsed following the hurricane, hedge accounting must be discontinued. Amounts previously recorded in OCI must be reclassified immediately to profit or loss (IFRS 9.6.5.12–6.5.13). If the hedged transaction is still expected to occur but is delayed, hedge accounting may continue, provided the “highly probable” criterion remains satisfied.
Provisions, Onerous Contracts and Cleanup Obligations
Hurricane Melissa may give rise to new obligations that must be recognised under IAS 37 provisions hurricane criteria, including:
Cleanup and restoration obligations, for example environmental remediation or repair commitments under leases.
Onerous contracts, where the unavoidable cost of fulfilling a contract now exceeds the expected economic benefit, such as fixed price construction or supply agreements where costs have spiked due to the storm.
Lease and service contracts that have become economically burdensome, especially where leased premises are unusable but lease payments continue.
A provision is recognised when there is a present obligation arising from a past event, it is probable that an outflow will be required, and the amount can be estimated reliably. By contrast, general expectations of lower profits do not justify a provision. Management needs to distinguish between specific obligations (which are provided for) and broader business risks (which are disclosed, but not accrued).
For leases, IFRS 16 replaces the old IAS 37 “onerous lease” model. Lessees no longer recognise lease onerous provisions; instead, they assess the right-of-use (ROU) asset for impairment under IAS 36. If a leased property is unusable after the hurricane, the ROU asset may be impaired, and the lease liability is remeasured only if the lease contract is formally modified (for example, if the landlord offers rent relief). Where there is no modification, lease payments continue and the impairment is recorded solely against the ROU asset. This approach conceptually resembles an onerous contract, but IFRS 16 prescribes the mechanics.
Government Grants and Relief
Governments and international agencies frequently respond to major disasters with financial support measures. These may include:
Direct cash grants for SMEs and affected sectors.
Wage subsidies or utility relief.
Tax waivers or deferrals.
Concessional loans with below market interest rates.
Under IAS 20, government grants cannot be recognised until there is reasonable assurance that (a) the entity will comply with any attached conditions, and (b) the grant will be received. Grants related to assets may either be presented as deferred income recognised over the asset’s useful life or deducted from the asset’s carrying amount (IAS 20.24–28). Income-related grants, such as wage support or utility subsidies, are recognised in profit or loss over the periods in which the related costs are incurred (IAS 20.29–32). Disaster-related relief often contains compliance conditions (e.g., continuing operations or retaining staff), so entities must assess when reasonable assurance truly exists.
Financial Statement Presentation and Disclosure
The accounting treatments described above feed into the three primary financial statements and the notes.
1 Income statement
Expect to see:
Impairment losses on property, plant and equipment.
Inventory write downs.
Increases in credit loss expense.
Provision expenses for cleanup and onerous contracts.
Insurance and grant income, where recognition criteria are met.
IFRS does not allow “extraordinary items”, but many companies present a subtotal for results before exceptional items, followed by a separate line for significant hurricane related impacts. Whatever the format, the key is clarity and consistency.
2 Balance sheet
Changes may include:
Lower carrying amounts for assets, or removal of destroyed assets.
New or increased provisions.
Higher allowances for doubtful accounts.
New insurance receivables, grant balances or deferred income.
Additional borrowings taken to finance recovery.
3 Notes and narrative reporting
At a minimum, companies should include a dedicated Hurricane Melissa impact note, explaining:
What happened and which parts of the business were affected.
The main financial statement impacts by category, with amounts.
Key estimates and judgements, including impairment assumptions and ECL overlays.
Outstanding uncertainties, such as unresolved insurance claims or significant unresolved grants.
The company’s recovery plan and how management is addressing liquidity and operational risk.
For listed entities, disclosures in the MD&A or board report should mirror and expand on the note, using plain language so that non accountants can understand the situation.
Sector Snapshots – How Impacts Differ by Industry
While the IFRS principles are the same, their practical application differs across sectors.
1 Tourism and hospitality
Hotels, resorts and attractions face:
Major PPE impairments or write offs for damaged buildings and facilities.
Potential goodwill and brand impairment where long term cash flows are affected.
Extensive property and business interruption insurance claims, often with long resolution timelines.
Going concern considerations for smaller operators that lack group support or strong balance sheets.
Revenue deferrals or refunds for cancelled bookings and unearned deposits.
Disclosures should address physical damage, expected reopening timelines, insurance reliance and the projected recovery of tourist demand.
2 Retail and consumer goods
Supermarkets and distributors must:
Write down large volumes of spoiled or damaged inventory.
Impair store fixtures and leasehold improvements where premises are damaged.
Treat rent concessions and lease modifications under IFRS 16.
Consider whether any stores or leases have become onerous.
Investors will focus on inventory losses, the speed of restocking and reopening, and the extent of insurance cover.
3 Financial services
Banks and lenders must:
Recalculate expected credit losses for borrowers and sectors directly or indirectly affected by the hurricane.
Account for loan moratoria and restructurings.
Adjust collateral values where security has been damaged.
Disclose the impact on portfolio quality and capital coverage.
Insurers face large claim liabilities under IFRS 17 and will need to explain their exposure, reinsurance protection and capital adequacy.
4 Manufacturing, utilities and infrastructure
These entities need to:
Impair or write off damaged plants, machinery, roads, power lines and telecom infrastructure.
Distinguish between repairs and capital replacement, capitalising where appropriate.
Recognise provisions for cleanup, contract penalties and reconstruction obligations.
Address revenue impacts from plant shutdowns, toll waivers or service outages.
Given the public importance of utilities and transport, their disclosures should also cover service restoration plans and any regulatory arrangements to recover costs through future tariffs or concessions.
Practical Action Plan for Management
To move from theory to execution, management teams should consider the following steps:
Set up a cross functional financial impact task force that includes finance, operations, legal and risk.
Document all losses carefully using counts, photos, engineering reports and cost breakdowns.
Engage insurers early and track claims status, but resist the urge to book recoveries prematurely.
Update cash flow forecasts and budgets to reflect recovery costs, lost revenues and expected support inflows. This can be done through CreedIQ.
Reassess credit risk across loans and receivables and adjust ECL methodologies and assumptions.
Identify new obligations and onerous contracts and calculate required provisions.
Map and apply all relevant IFRS standards, seeking specialist advice where needed.
Draft clear, user friendly disclosures, including a dedicated hurricane impact note and aligned messaging in MD&A.
Communicate proactively with lenders, investors, staff and regulators to avoid surprises and build trust.
Capture lessons learned and embed them in disaster response and financial reporting policies for the future.
Conclusion – Using Transparency to Support Recovery
Hurricane Melissa has created immense hardship, but it has also highlighted the importance of strong governance and transparent reporting. Strong governance and transparent corporate recovery reporting Jamaica help businesses support investor confidence and rebuild credibility. By recognising losses promptly, applying IFRS requirements consistently, and explaining impacts clearly, companies can:
Maintain credibility with investors, lenders and regulators.
Support informed decision making around capital, strategy and operations.
Demonstrate resilience and responsible leadership at a time when it matters most.
Behind every impairment charge or provision is a real story of damage, response and rebuilding. Good financial reporting does not just satisfy technical rules, it helps stakeholders understand that story and judge the strength of the company’s plan to move forward.
Handled well, the financial reporting process after Hurricane Melissa can be part of Jamaica’s wider recovery narrative, showing not only what was lost, but how businesses are adapting, securing support and rebuilding for the future.