Opinion

Impact of COVID 19 on Economy - Auditors to Play a Great Role

Punjab Tribune Bureau | April 27, 2020 12:14 PM
Punjab Tribune Bureau

The Corona virus panademic is a Global human tragedy. The spread of pandemic also is having serious economic implicaitons . Numerous sectors of economy are suffering damage and long term economic and business consequences remain unknown. Among the many consequences of COVID 19, entities may face financial reporting implications and challenge. Impacts such as business and production disruptions, supply chain interruptions, negetive impact on customers, volatility in the equity and debt markets, reduced revenue, and cash flows and other economic consequences may occur.

Investors in capital markets rely on accurate and timely reporting from the listed companies in which they invest but the unprecedented events of the last couple of weeks caused by the emergence and spread of the coronavirus 2019 ("COVID-19") pandemic mean that the basis on which companies are reporting and planning is changing rapidly and boards of listed companies are fighting to keep up. .

In this changing scenerio , the role of Chartered accountants as Auditors have increased manifold as they have to give true and fair view of the results of the companies or firms to the public at large. To my opinion , the auditors have to work on the following additional things::-.

•  With the Covid-19 outbreak, auditors may need to reassess the risks of material misstatement of the financial statements, as the information on which the initial risk assessment was based may have changed. .

•  Due to the travel restrictions and various working arrangements, auditors may have difficulties with accessing client premises to perform audit procedures; and/or may not be able to obtain the sufficient appropriate audit evidence.

•  For Joint audits, Joint auditors in affected countries may encounter difficulties in obtaining sufficient appropriate audit evidence, which may cause significant delays in the completion of audits. I.

•  The Covid-19 outbreak has caused, and has a potential to cause, a significant impact on some entities’ economic conditions, which may affect the assessment of the entity’s ability to continue as a going concern. Auditors are responsible for obtaining sufficient appropriate audit evidence regarding, and have to conclude on, the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial statements; .

•  Auditors may also consider the impact of events that occur after the date of the financial statements. Auditors may consider the financial reporting and disclosure requirements for the material impairment of assets or businesses as a result of the Covid-19 outbreak.

•  Auditors may also consider the impact of Covid-19 on the auditor’s responsibilities relating to accounting estimates, including fair value accounting estimates and related disclosures in the audit of the financial statement, .

Auditors may have to face big challenges with respect to conduct of audit so far as following are concerned:-

•  Will the auditor have access to attend inventory counts?

•  How can the required audit information be provided to the auditor if either the auditor or the entity imposes mandatory or voluntary quarantines (i.e. no access to the office to obtain the information)?

•  How will the timing of the audit be affected from workforce shortages due to illness or travel restrictions?

•  How will the adjustments to internal controls affect the ability of the auditor to complete their audit? (i.e. to address the impact of COVID-19, or from changes in personnel due to quarantining)

•  Do the entity or its subsidiaries do business overseas? If audits are required in these locations, how can the auditor gain access to the supporting information required to issue an audit opinion?

Thus, there are big questions which are still unanswered and in respect of which policies are required to be formed in a standard format internationally  by the Government so as the Listed Companies shall not in any way be able to publish  inaccurate results to the public who have invested there hard earned money as investors.

 

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