COVID-19: Key focus areas for audit committees

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The COVID-19 crisis has led to circumstances and counter-measures that are unprecedented. With the entire country under lockdown, there is significant impact on businesses and financial markets. Companies need to consider financial reporting implications during preparation of their financial statements in the wake of this ongoing crisis. At the same time, audit committees will need to understand how management and auditors dealt with the fallout, in discharging their duties on the financial reporting oversight front. While there may be further questions specific to each company and sector, there’re a few common questions that the audit committees should consider asking the management and auditors.  

Questions that audit committees should be asking management relate to:

• Overall impact of COVID-19
• Existence, changes and effectiveness of controls
• Impact on going concern assessment
• Management estimates
• Challenges in preparation of consolidated financial statements

...and many more.

Likewise, the process of annual audits is also likely to pose its own challenges this year with certain procedures being undertaken by auditors remotely or certain procedures such as physical verification of inventory being delayed/shelved.

Questions that audit committees should be asking auditors relate to:

• Agreement with management’s assessment of impact and related disclosures
• Impact on risk assessment of audit
• Additional procedures performed to address new risks identified
• Impact on group audit
• Any reporting in auditor’s report

…and many more.