The Impact of COVID-19 on Audits

Since late 2019, the outbreak of COVID-19 and global inflection have brought significant challenges to the world. Because of the country entry restriction, visa suspensions and quarantine measures, auditors are difficult to access their client’s premises or financial information. These measures caused auditors may not be able to obtain sufficient and appropriate audit evidence to draw the auditors’ opinion complying with auditing standards.

Recently, the Hong Kong Institute of Certified Public Accountants has issued an article and give some guidance to the members on performing the audit works during these difficult situations and here are some of the suggestions:

  • Auditors should obtain understanding with their clients about COVID-19 impact on their business and reporting time schedule, give corresponding suggestions and keep regular communications.
  • With the outbreak of COVID-19, auditors should revise the risk assessment and modify their audit planning.
  • Alternative audit procedures should be considered when auditors are restricted from accessing their clients’ offices and financial information.
  • Group auditors should closely monitor the audit progress of component auditors (especially in Mainland China). If any sufficient delay is found, auditors should communicate with clients and amend the reporting time schedule immediately.
  • COVID-19 hampered the economic activities all over the world. Auditors should be aware of impacts of COVID-19 on economic conditions of clients before and after the reporting period and make adequate disclosures.

References:

HKSA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment, paragraphs 31 and A152

HKSA 501 Audit Evidence – Specific Considerations for Selected Items, paragraphs 7, A12–A14

HKSA 505 External Confirmations, paragraphs 12, A18-19

HKSA 560 Subsequent Events

HKSA 570 (Revised), Going Concern, paragraph 6

HKSA 600 Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors

HKSA 701 Communicating Key Audit Matters in the Independent Auditor’s Report for guidance

HKSA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information

HKAS 1 (Revised), Presentation of Financial Statements

The above information was extracted from the Alert No.9 released by Hong Kong Institute of Certified Public Accountants. For more information, please visit the website:

https://www.hkicpa.org.hk/-/media/HKICPA-Website/New-HKICPA/Standards-and-regulation/SSD/03_Our-views/Financial-Reporting-Auditing-and-Ethics-Alert/alert32a.pdf




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