The impact of Covid-19 is already having a “significant impact” across the audit profession and public practice leaders, according to research from ACCA Covid-19 global survey: inside business, impacts and responses.
ACCA has revealed that the pandemic has had “specific implications” for auditing firms, with the nature of the audit process needing “engagement and direct interaction” with the audited entity.
It said that although digital advances continue to influence how audits are conducted and how evidence is gathered, as well as aspects of the reporting process, for many firms the crisis is creating a “systemic shock” to normal client engagement activities.
Its survey found 53% of respondents said they were experiencing pressures completing client services work, and over a third (36%) said they faced an “inability to meet reporting deadlines” – a point recognised in many jurisdictions where reporting deadlines have been flexed.
In addition, a quarter said they’re experiencing difficulties in gathering audit evidence, and 27% said they saw an increased audit risk relating to valuation of assets, completeness of liabilities or going concern issues.
On a positive note, the 1,857 respondents said they have already reported “significant opportunities” for providing enhanced insights and value to audited entities through the audit process.
Mike Suffield, director professional insights at ACCA, said: “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. There are challenges ahead, but respondents also spoke openly about opportunities.”
ACCA fellow, Dato’ Lock Peng Kuan, managing partner, Audit and Assurance, Baker Tilly Malaysia and chair of ACCA Audit and Assurance Global Forum, added: “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.”
Focussing on the risks ahead for all businesses across all sectors, Mike Suffield added: “These immediate impacts will resonate into the future, and it’s important that we do not lose sight of business fundamentals. Even in the face of Covid-19, businesses large and small will still face existing risks such as cybersecurity.
“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.”