How to Audit in a COVID-19 Environment
Author: Salvatore Collemi
| CPE Credit: |
2 hours for CPAs |
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.
The full impact of the COVID-19 outbreak continues to evolve. As such, it is uncertain as to the full magnitude that the pandemic will have on organizations’ financial condition, liquidity, and future results of their operations. Organizations’ management are actively monitoring the situation on their financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, companies are not able to estimate the effects of the COVID-19 outbreak on their results of operations, financial condition, or liquidity for fiscal year 2021. If the pandemic continues, it could have a material adverse effect on companies’ results of future operations, financial position, and liquidity in fiscal year 2021.
This session will provide external auditors both practical and insightful perspectives on how to navigate an audit engagement of a private company in 2021. You'll learn which areas of the audit have increased in risk due to COVID-19 as well as what alternative audit procedures are available to engagement teams in circumstances where traditional audit procedures are not possible. You'll acquire a clearer and deeper understanding of what will be needed to be done in order properly perform audit engagements under this difficult environment in accordance with Professional Standards.
Publication Date: July 2021
Designed For
Practitioners in public practice who conduct audits of privately-held organizations.
Topics Covered
- Overview
- Proper Planning During the Pandemic
- Changes in Certain Audit Procedures
- Understanding the Internal Control Environment Remotely
- Management Representation Letters
- Going Concern Assessments
- SOC Reports
- Significant Implications on Financial Reporting and Disclosures
- Auditor's Report Implications
- PPP Loan Borrower's Consideration
- Resources and Tools
Learning Objectives
- Identify areas of the audit where risk has gone up significantly due to the pandemic
- Recognize viable alternative audit procedures to perform
- Describe how to address potential reporting implications
- Identify what is likely not an area which impacts audit procedures because of COVID-19
- Differentiate which AU-C lists out requirements and procedures that may be more difficult to perform in a remote audit situation
- Describe correct statements regarding changes in procedures specific to confirmations in response to COVID-19
- Identify the last step in the order of asset impairment testing
- Recognize which model considers accrued interest with respect to SBA Paycheck Protection Program Loans
Level
Update
Instructional Method
Self-Study
NASBA Field of Study
Auditing (2 hours)
Program Prerequisites
General knowledge of AICPA Professional Standards.
Advance Preparation
None
