The coronavirus pandemic continues to spread in many countries, including in Europe. The World Health Organization (WHO) and national authorities can be consulted for the health implications on people. This crisis also has significant economic effects on companies, for example due to restrictions in production, trade and consumption or due to travel bans.
These economic effects have an impact on accounting, reporting and auditing financial statements of the companies or groups concerned. This publication highlights some of these potential implications. However, the impact on companies will differ and companies, and their auditors, have to consider how it affects their business and review them regularly. The further development, duration and impact of the coronavirus cannot be predicted. In any case, accountants and auditors should remind companies of the various national initiatives for relief to companies.
Standards should be adhered to and companies should consider going beyond their means. In addition, companies should consider going beyond them to respond to their actual accounting and reporting challenges caused by the coronavirus in a sensible and practical way. As at 31 December 2019, China had alerted the World Health Organisation (WHO) of several cases of an unusual form of pneumonia in Wuhan. However, substantive information about what has now been identified as coronavirus only came to light in early 2020.
As we progress through 2020, more information is coming to light on the scale and impact of coronavirus. The auditor should consider the difficulties that management may have in preparing future projections, recognising the highly uncertain and fluid situation. Indeed, such projections could change significantly in a short space of time. It’s essential for the auditor to use professional judgement and scepticism. They need to exercise care to ensure that any projections reflect the situation as, and when, an audit report is to be signed.
Auditors should consider how to gather sufficient appropriate audit evidence. In this, auditors should recognise that they may need to change the audit approach and develop alternative procedures. Given that everyone now works remotely, workflow control is required. With CaseWare Cloud, your company can monitor all workflows. In combination with CaseWare Working Papers, audit becomes more efficient and structured with less time spent.
The software is fully automated and does not require paper workflow. All stages of the audit procedures are fully prescribed in accordance with International audit standards.
Auditors are advised to be proactive and discuss with their clients the impact of the coronavirus on the company, its business, operations, reporting timetable and the related audit timetable, including their respective contingency plans. There is a risk of delays because the company can be interrupted in preparing information.
Some companies and auditors are facing practical difficulties in preparing accounts and carrying out audits. This is likely to affect how audit firms will audit those companies. Given increasingly restricted travel, meetings and access to company sites, auditors need to develop alternative audit procedures to gather sufficient appropriate audit evidence.
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