THE AUDIT IMPLICATION OF COVID 19

 

The COVID-19 pandemic has disrupted life around the world, but business, in altered fashion, goes on. Companies will have to report on their operations, financial condition, and cash flows during this crisis, and those reports will have to be audited. The author details considerations management and auditors will need to take when preparing and auditing financial statements.

The unprecedented current situation caused by Covid-19, has disrupted most professions across the globe with accounting and auditing being no exception. Mandatory lockdown measures were imposed by governments to control the spread of the virus, with individuals having to work from home where possible. For auditors, this means they can no longer travel to audited entity premises, nor even to their own offices and that their audits will have to be completed remotely. If there is a positive side to this significant challenge for auditors, it is that the audit profession was already on a journey to becoming more digital, and the investment in digital capability has allowed many firms and practitioners to adapt to the new circumstances relatively more quick than other industries. Notwithstanding this, a number of practical challenges have emerged. As ACCA’s Covid-19 global survey: Inside Business, This paper highlights some of the practical challenges auditors are now faced with, in light of Covid-19, and highlights some of the key considerations for auditors by referring to the relevant International Auditing Standards. As a result of COVID-19, these functions adapted and implemented procedures to provide the expected level of service demanded by their stakeholders. Many audit functions modified their plans from a traditional basis to one that focuses on the current year only, adapting a quarterly plan to prioritize services.

In the first quarter of 2020, internal audit functions responded to immediate needs and concerns, including temporarily redeploying staff to the business. For example, internal auditors have helped management to get recovery programs—e.g., the Paycheck Protection Program (PPP)—and activities started, and fill in gaps when needed and appropriate. Fortunately, due to the nature of their work, many internal auditors were already experienced at working remotely and able to adapt quickly to the new working environment.

References

IAASB Staff Alert Highlighting Areas of Focus in an Evolving Audit       Environment Due to         the Impact of COVID-19. Retrieved from         https://www.ifac.org/system/files/publications/files/Staff-Alert-   Highlighting-Areas-        of-Focus-in-an-Evolving-Audit.pdf

IESBA Staff Alert Covid-19: Ethics and Independence Considerations -US     SEC The         Importance of Disclosure – For Investors, Markets and Our       Fight Against COVID-        19. Retrieved from      https://www.ifac.org/system/files/publications/files/Staff-Alert- Navigating-the-Heightened-Risks-of-Fraud-and-Other-Illicit-Activities-  During-the-        COVID-19-Pandemic_0.pdf

ACCA The impact of Covid-19 on Audit and Assurance – challenges and       considerations         Accountancy Europe Coronavirus' impact on auditing        for 2019 year-ends and         beyond AICPA Audit and accounting       guidance FAQs on COVID-19         https://www.accaglobal.com/content/dam/ACCA_Global/img/respcam/         Coronavirus/The%20impact-of-Covid-19-on-Audit-and-Assurance-       challenges-        and-considerations.pdf

AICPA Consequences of COVID-19 - Potential auditing challenges Retrieved from         https://future.aicpa.org /resources/download/consequences-of-  covid-19-potential-        auditing-challenges