The coronavirus pandemic has specific implications for auditing firms, with the nature of the audit process needing engagement and direct interaction with the audited entity, said ACCA recently.
Although digital advances continue to influence how audits are conducted and how evidence is gathered, as well as aspects of the reporting process, crisis is creating a systemic shock to normal client engagement activities for many firms, the ACCA noted in its report titled Covid-19 global survey: inside business, impacts and responses, which is based on a survey with responses from more than 10,000 ACCA members and other stakeholders across the world from more than 100 countries on March 13, 2020.
“From increased pressure to complete audit work to issues in getting audit evidence, and very sensitive judgments in areas such as going concern, auditors will need to re-evaluate how they undertake normal auditing activities,” said Mike Suffield, director – professional insights at ACCA. “There are challenges ahead, but respondents also spoke openly about opportunities.’
“The key factor in managing a crisis of any nature is, first, to maintain a strong element of trust within the organisation, and with clients. It is immensely heartening to see respondents put health and safety top of their actions in dealing with the pandemic,” said ACCA fellow, Dato' Lock Peng Kuan, Managing Partner, Audit & Assurance, Baker Tilly Malaysia and Chair of ACCA Audit and Assurance Global Forum.
- A significant 53% of respondents said they were experiencing pressures completing client services work
- More than a third (36%) said they faced an inability to meet reporting deadlines - a point recognised in many jurisdictions where reporting deadlines have been flexed.
- A quarter said they’re experiencing difficulties in gathering audit evidence
- 27% said they saw an increased audit risk relating to valuation of assets, completeness of liabilities or going concern issues.
- On the positive side, the 1,857 respondents to the global research from public practice and audit leaders have already reported significant opportunities for providing enhanced insights and value to audited entities through the audit process.
Focussing on the risks ahead for all businesses across all sectors, Mike Suffield said these immediate impacts will resonate into the future and it’s important that auditors do not lose sight of business fundamentals.
“Even in the face of the pandemic, businesses large and small will still face existing risks such as cybersecurity,” he pointed out. “We need to remember that different ways of working and strategic reactions could change these risks or even introduce new ones. Ensuring that risks continue to be managed, both specifically in response to the crisis and more generally, is essential.”