ASSIGNMENT ON

(Potential impact of COVID-19 on Auditing and Audit Report)

SUBMITTED BY:

Md. Nabil Ibrahim

Batch 39th, ID: 11839055

Department of Accounting & Information Systems

University of Dhaka.
 Table of Contents

CHAPTERS PAGES

Introduction 1-3
Impacts on audit activities because of 3-7
COVID-19 all over the world
Impact on audit activities because of COVID-19 7-8
In Bangladesh
Key audit matters (KAM) in audit reports 9-14

Roles of Audit Committee 15-16

Technology used in conducting audit 17-18

Conclusion 19
Introduction

The unprecedented current situation caused by Covid-19, has disrupted most professions across
the globe with accounting and auditing being no exception. Mandatory lockdown measures were
imposed by governments to control the spread of the virus, with individuals having to work from
home where possible. For auditors, this means they can no longer travel to audited entity
premises, nor even to their own offices and that their audits will have to be completed remotely.

If there is a positive side to this significant challenge for auditors, it is that the audit profession
was already on a journey to becoming more digital, and the investment in digital capability has
allowed many firms and practitioners to adapt to the new circumstances relatively more quick
than other industries.

Notwithstanding this, a number of practical challenges have emerged. As ACCA’s Covid-19

global survey: Inside Business, Impacts and Responses finds1, a significant 53% of respondents
working in public practice 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
recognized in many jurisdictions where reporting deadlines have been flexed. 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.

This paper highlights some of the practical challenges’ auditors are now faced with, in light of
Covid-19, and highlights some of the key considerations for auditors by referring to the relevant
International Auditing Standards. The paper also highlights the role of Audit Committee and the
technology the auditor may use during the preparation of audit report.

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What is an Audit?

An audit is a detailed examination of an existing system, report or entity. The term audit is
commonly linked to a financial audit where an organization's financial reports are investigated to
determine whether the information is a fair and accurate representation of the transactions it
represents.

Types of Audit

Initially there are two types of audit. A) Internal Audit B) External Audit

Internal audits

An internal audit, also called an operational audit, is conducted internally in an organization to

provide assurance over internal controls effectiveness, risk management, efficiency and
administration of organizational goals. Internal audits can help a company define areas for
improvement while providing necessary information to reach company goals.

One of the company's employees conducts the audit and then reports their findings to an audit
committee of the board of directors.

Unlike an external audit, which usually focuses on financial matters, the scope of an internal
audit is broad and can include anything that may have an impact on achieving company goals.

An internal audit often centers around key activities such as:

 Investigating cases of fraud or theft

 Monitoring regulations and law compliance
 Checking the effectiveness of internal controls and putting forward improvement ideas
 Reviewing and verifying financial and operational information
 Examining the economy, efficiency and effectiveness of company processes and
operations
 Evaluating company risk management procedures and policies

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External audit

An external audit, otherwise known as a statutory or financial audit, confirms the reliability and
credibility of financial reports. A third independent party with no connection to your business
such as a tax agency, the IRS or an accountant performs an external audit. Generally accepted
auditing standards regulate external audits. Determining the accuracy of accounting records is
the main objective.

Company law in most jurisdictions requires an annual external audit for companies over a certain
size. The need for an external audit comes from the separation of control and ownership in a
large company, where shareholders nominate directors to run the company on their behalf.
Shareholders need assurance that the company's financial reports are accurate. An external audit
provides a reasonable confidence to the shareholders that the financial statements are free from
material misstatements.

There are some other types of audit as well. like forensic audit, tax audit, public sector audit,
information system audit, social and environmental audit etc.

Impact on the audit activities because of Covid-19

Revision of Risk Assessment

The auditor’s assessment of the risks of material misstatement at the assertion level can change
during the lifespan of the audit because of the additional audit evidence obtained. This audit
evidence is gathered by the auditor through performing of further audit procedure or the new
information is obtained, either of which is inconsistent with the audit evidence on which the
auditor originally based the assessment, the auditor shall revise the assessment and modify the
further planned audit procedures accordingly. The unprecedented state of emergency caused by
Covid-19 has impacted the operating environment of entities. As a result, auditors must consider
how this impacts their risk assessments and whether any revision is needed.

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This was also noted in the UK’s Financial Reporting Council (FRC) Covid-19 Bulletin March
2020,which stated that, for audits which are underway relating to periods that end after 31
December 2019, the impact of Covid-19 is likely to require the auditor to revisit their risk
assessment and the proposed response to identified risks. The Institute of Certified Public
Accountants of Cyprus’ Technical Circular provides similar guidance, clarifying that risk
assessments would need to be continuously reassessed and calibrated as the situation evolves, up
until the audit report signing date and emphasizing this as an area that needs to be treated with a
higher degree of professional skepticism. In ACCA’s article on Covid-19 issues for corporate
reporting stated the pandemic as a triggering event and it feels auditor needs to do more frequent
impairment testing and have to build professional skepticism. As the pandemic possess a high
degree of uncertainty about future business performance and economic conditions it will affect
the assumption and valuation. That’s why ACCA wants the auditors to recognize an increased
audit risk in the valuation of assets.

Revision the entity’s ability to continue as a going concern

The auditor should also take into consideration any preliminary assessment performed by
management regarding the entity’s ability to continue as a going concern. Covid-19 is highly
likely that would affect such preliminary assessments. ISA 570 (Revised), Going Concern
paragraph 11 states, auditors should remain alert throughout the audit for audit evidence of
events or conditions that may cast significant doubt on the entity’s ability to continue as a going
concern.

The Covid-19 is likely to have significant implications for global economics and markets for
certain industries such as hospitality, retail, travel. The downturn will result in a significant
increase in both the volume and severity of events and conditions that may in some instances cast
doubt on an entities ability to continue as a going concern. However, this does not necessarily
mean that a material uncertainty automatically exists- the increased risk of significant doubt on
an entity’s ability to continue as a going concern will rather depends on the nature and
circumstances of the entity, including the industry in which it operates. Examples of events or
conditions that may exist as a result of the Covid-19 pandemic include: Lose of a major market,

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key customers, revenue, Labor shortages; significant deterioration in the value of assets used to
generate cash flows; significant deterioration in the value of current assets- inventory; delay in
the launch of new products, counterparty credit risk, the entities solvency etc.

Review the entity’s internal control system

Auditors must also take into consideration any changes to the entity’s internal control system due
to Covid-19. For companies that have laid off key personnel and with work forces moving out of
the typical office environment, there could be a breakdown in internal control and whether any
planned reliance on controls in determining responses to identified risks of material misstatement
should also be reassessed as noted in the IAASB’s Staff Audit Practice Alert.

Review the responses to assessed risk

ISA 330, The Auditor’s Responses to Assessed Risks, requires auditors to respond to assessed
risks by obtaining sufficient appropriate audit evidence regarding the assessed risk of material
misstatement, through designing and implementing appropriate responses to those risks.

Covid-19 in many cases will necessitate auditors to consider if the design and implementation of
their responses to the identified risks is still relevant or whether they need to be revised.

Changes in procedure in collecting audit evidence

ISA 500, Audit Evidence, requires auditors to design and perform audit procedures to enable the
auditor to obtain sufficient appropriate audit evidence, from which to draw reasonable
conclusions on which to base the auditor’s opinion.

However, due to the current restrictions in place due to Covid-19, auditors in most, if not all
cases, can no longer visit audited entity premises. This creates obvious practical challenges for
auditors needing to obtain physical forms of evidence. The use of technology can help auditors
overcome these challenges.

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For example, auditors may not be able to attend planned inventory counts physically in order to
observe the process. However, auditors may be able to observe inventory counts virtually via
videocalls or drawing on drone technology. Auditors must ensure that they can rely on the
technology they are planning to use and remain sceptical when observing the process. For
example, they may need to consider asking their company staff to show them a clear view of the
entire warehouse before the inventory count starts, which will avoid restricting themselves in
choosing to test items that are only visible during the videocall. It is also very important that the
process followed is well documented. Some practical examples noted by ACCA’s Audit and
Assurance global forum members included:

• Participation of more than one member of the audit team during observation through
videoconferencing equipment to enhance the observation capabilities and mitigate the risk

• Selecting more items to test during observation than usual

• Taking screenshots during the observation to enhance the evidence

Perform additional and alternative audit procedures

In cases where the inventory count is scheduled at a date other than the financial statements
period end, auditors will need to perform additional audit procedures to obtain evidence
regarding the changes in inventory between date of the inventory count and the financial
statements date. If the physical inventory counts are to take place at a later date than originally
scheduled, auditors will have to perform additional procedures such as reviewing and testing
inventory rollforwards

If physical inventory counting is impracticable

The current Covid-19 restrictions affect both auditor and the organizations that they audit, and in
some cases, it may not be possible to conduct inventory counts at the period end. In such cases,
auditors will need to discuss with their clients whether an inventory count at a later date is
planned and determine the feasibility of physical auditor attendance or virtual as noted above.
Further, auditors will need to perform audit procedures to assess the validity of the recorded
changes between the count date and the date the financial statements. The changes between the

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two dates will mainly depend on the industry that the entity operates in. In cases where
businesses have paused their operations, the changes may not be significant and so, should not
cause much problem for auditors to perform their audit procedures, although that could still
impact the valuation of inventory. However, where trade has been possible, the changes between
period end and count dates may be significant and this may be exacerbated if the duration
between dates is long.

Paragraph A13 of ISA 501, guides that where attendance is impracticable alternative audit
procedures may include the inspection of documentation of the subsequent sale of specific
inventory items acquired or purchased prior to the physical inventory counting, and this may
provide sufficient appropriate audit evidence about the existence and condition of inventory.

Where it is not possible to obtain sufficient appropriate audit evidence regarding the existence
and condition of inventory by performing alternative audit procedures, auditors will need to
consider the implications to their audit opinion, following ISA 705 (Revised), Modifications to
the Opinion in the Independent Auditor’s Report. It sets out the requirements for modifying the
auditor’s opinion when the financial statements are not free from material misstatement or the
auditor in unable to obtain sufficient appropriate audit evidence.

Impact on audit activities due to Covid-19 in Bangladesh

New challenges have emerged in preparing financial statements for business entities in the
aftermath of Covid-19

The auditors, in a report submitted to the Financial Reporting Council (FRC) recently,
highlighted the challenges and the possible impacts on financial reporting.

Due to the significant changes in macro-economic assumptions as well as the entity-specific

conditions from Covid-19, key estimates and variable previously used for fair value
measurement of assets and liabilities may no longer be valid and need re-assessment.

The report said due to the cancellation of orders and modification of contractual arrangement
with customers factors such as probability of return, further discount, timing of transferring risk
and reward due to supply chain disruption need to be assessed before figuring out revenue.

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The report said due to Covid-19, there may be changes in remuneration policies, especially for
defined benefit plan changes in key actuarial assumptions should make lower estimate
considering the lower income.

It said if any deferred tax asset is recognized on carry forward tax losses, the related assumption
needs to be revisited, especially whether the entity can still make adequate taxable profit after
Covid-19 impact, which will be available to offset such carry forward tax losses.

Covid-19 would impact insurers from lower policy renewal, refund of premium for business
cancellation, higher claims, and lower returns from investment.

On the other hand, an entity taking insurance policy may need to assess whether it is entitled to
any claim compensation from loss of profits and business disruption, including timing of
recognition of such claim or compensation, the report said.

It said the government announced a number of economic stimulus packages for affected
businesses and such incentives would fall under 'IAS 20: Accounting for Government Grants and
Disclosure of Government Assistance'.

This is a new area that needs to be adjusted with financial reporting.

Due to lockdown, auditors are facing practical difficulties in carrying out audits.

"To enable the auditors to perform audits, additional time may be required and alternative audit
procedures may need to be performed in order to obtain sufficient appropriate audit evidence," it
said.

It said they assume an entity is a going concern while preparing financial statements, but the
pandemic forced many to close their factories.

"Given the unpredictable nature and impact of the COVID-19 outbreak, in some cases it might
be appropriate to consider the possibility of delaying the approval of the financial statements and
issuance of audit report until more certainty about the impact of such outbreak is known."

It said if the client is not willing to extend the timeline of completing the audit, the auditors need
to assess whether they have obtained sufficient and appropriate audit evidence to make an
opinion. If the answer is negative, the auditor needs to appropriately modify audit report.

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The report said all listed entities in Bangladesh are required to publish annual reports and most
likely there would be comments on Covid-19 and its impact on those entities in their annual
reports.

"The auditor now has an added responsibility to read and comment on other information
published along with the financial statements such as contents in annual report," it added.

Impact of COVID-19 on disclosing key audit matters

Key Audit Matters (KAM) are defined as “Those matters that, in the auditor's professional
judgment, were of most significance in the audit of the financial statements of the current period.
Key audit matters are selected from matters communicated with those charged with governance.

In total, there were 1,321 KAMs reported across 560 audit reports. By some margin, the most
common KAM relates to asset impairment, Revenue recognition, excluding any reference to
fraud, is the second most common KAM, followed by doubtful debt, goodwill impairment and
considerations relating to tax, including the valuation of deferred tax assets.

ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report, deals with the
auditor’s responsibility to communicate matters of most significance in the audit of the financial
statements of listed entities or other entities for which law or regulation requires communication
of key audit matters. In other circumstances, auditors may also decide to communicate key audit
matters.

When ISA 701 applies, additional focus may be needed on the key audit matters reported in the
auditor’s report because of the changing circumstances due to Covid-19. The areas that were
significant in the KAMs in a prior year may require expansion to include consideration for the
current year audit response in that area for Covid-19, as well as consideration of other KAM
arising from Covid-19 impacts (e.g. valuation reports, materiality calculations, government
support).

There are some major key audit matters that the auditors have to keep a close eye. Auditors
should be skeptical while assessing these audit matters. Some of them are discussed below.

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Impairment of assets

As a result of the continued downturn in global market conditions and the general business
environment, impairment considerations may become an area of concern for many companies.
As social distancing continues to disrupt businesses and supply chains, companies may need to
review goodwill, indefinite-lived intangible assets, as well as other long-lived assets for
impairment. IAS 36 requires assets within its scope to be tested for impairment when indicators
of impairment exist at the end of a reporting period. Many of the indicators of impairment noted
in IAS 36.12(a)-(h) may exist due to the effects of COVID-19, including declines in quoted asset
values, operational disruptions to supply chains, and decreases in revenue and profitability.
Many entities will have to perform impairment calculations in accordance with IAS 36, and these
calculations may need to be significantly more detailed than have been prepared at previous
period ends. IAS 36 requires goodwill, intangible assets with indefinite useful lives and
intangible assets not yet available for use to be tested at least annually for impairment and at the
end of each reporting date whether there is any indication of impairment (IAS 36.9-10).
Consequently, entities that prepare interim financial statements may need to prepare impairment
calculations on these assets more regularly as indicators of impairment may exist at multiple
reporting dates despite the minimum requirement (i.e. an annual test) having been carried out
already. For example, an entity with a 31 December 2020 year-end may have tested its goodwill
and indefinite life intangible assets for impairment as at 31 December 2020. Despite this, the
entity may need to test the same assets for impairment again prior to 31 December 2021 (the next
mandatory testing date), because indicators of impairment may exist at an interim reporting date.
As a result of COVID-19, almost all entities that prepare interim financial statements would be
expected to be required to carry out an impairment test at the next reporting date in 2020
(whether this is 31 March for quarterly reporters or 30 June for entities that only publish half
year interim financial statements).

Expected credit losses

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IFRS 9 sets out a framework for determining the amount of expected credit losses (ECL) that
should be recognized. It requires that lifetime ECLs be recognized when there is a significant
increase in credit risk (SICR) on a financial instrument. However, it does not set bright lines or a
mechanistic approach to determining when lifetime losses are required to be recognized. Nor
does it dictate the exact basis on which entities should determine forward-looking scenarios to
consider when estimating ECLs. The IASB’s recent publication on IFRS 9 and Covid-197,
requires entities to develop estimates based on the best available information about past events,
current conditions and forecasts of economic conditions. In assessing forecast conditions,
consideration should be given both to the effects of Covid-19 and the significant government
support measures being undertaken. However, due to the uncertainty caused by Covid-19, if ECL
estimates are based on reasonable and supportable information, IFRS 9 and the associated
disclosures can provide much needed transparency to users of financial statements.

Accounting for lease modifications

On 24 April 2020, the IASB Board published Covid-19 Related Rent Concessions (Proposed
amendment to IFRS 16), an exposure draft (ED) which proposes to add a practical expedient
which would allow a lessee to elect not to assess whether a COVID-19-related rent concession is
a lease modification.

A lessee that makes this election would account for any change in lease payments resulting from
the COVID-19-related rent concession in the same way that it would account for the change
applying IFRS 16 if it were not a lease modification. The practical expedient would apply only to
rent concessions occurring as a direct consequence of COVID-19 meeting specified conditions.

The ED does not propose any changes to lessor accounting.

The proposed amendment would be effective for annual reporting periods beginning on or after 1
June 2020, with earlier application permitted.

For lessors, the Board decided to take no further action. It argued that as many entities face
significant challenges at the moment, there needs to be sufficient reason to undertake standard-
setting, which the Board did not see enough evidence for.

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Accounting for government assistance

IAS 20 prescribes accounting for, and disclosure of, government grants and other forms of
government assistance. The effect of a government grant in the scope of IAS 20 is recognized
when, and only when, there is reasonable assurance that the entity will comply with the
conditions attaching to it and that the grant will be received. This may be a judgmental matter,
particularly when governments are introducing new programmes that may require new
legislation, or for which there is little established practice for assessing whether the conditions to
receive a grant are met.

If the conditions are met, then a company recognises government grants in profit or loss on a
systematic basis and in line with its recognition of the expenses that the grants are intended to
compensate. Companies need to consider the conditions associated with the grant carefully to
determine whether it compensates expenses already incurred or future costs.

Measurement and presentation of government grants depends on the nature of the grant and the
company’s accounting policies. For example, companies may need to develop accounting
policies for:

 grants in the form of non-monetary assets – whether to measure at nominal or fair value.
 grants related to assets – whether to deduct the grant from the cost of the asset (net
presentation) or present the grant separately as deferred income to be amortised over the
useful life of the asset (gross presentation) and
 grants related to income – whether to offset the grant against the related expenditure or to
include it in other income.

Governments may be providing support to entities through programmes that do not result in
recognition of income in the financial statements of participating entities. For example, certain
governments are offering short-term debt facilities, sometimes in the form of commercial paper,
to support liquidity of entities that were financially sound before the COVID-19 pandemic.
Eligibility to the programme may be restricted to entities meeting certain criteria such as size or a

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pre-COVID-19 credit rating of investment grade. To the extent that the interest rate paid by the
borrower and other terms of the debt instruments reflect market conditions, the borrowing does
not include a “government grant” that requires recognition in the financial statements.
Nevertheless, such support is considered government assistance under IAS 20. Entities will need
to consider if the significance of the benefit received is such that disclosure of the nature, extent
and duration of the assistance is necessary in order to avoid the financial statements from being
misleading.

Revenue Recognition

Due to cancellation of orders and modification of contractual arrangement with customers factors
such as probability of return, further discount, timing of transferring risk and reward due to
supply chain disruption need to be assessed before recognizing revenue (IFRS 15).

Deferred Tax Assets

If any deferred tax asset is recognized on carry forward tax losses the related assumption needs
to be revisited especially whether the entity can still make adequate taxable profit after COVID-
19 impact which will be available to offset such carry forward tax losses (IAS 12).

Audit Opinion

The uncertainty caused by Covid-19 and particularly the challenges that auditors are currently
facing in obtaining sufficient appropriate audit evidence, could result in modifications to the
auditor’s opinion. As per ISA 705 (Revised), Modifications to the Opinion on the Independent
Auditor’s Report, there are three types of modified opinions:

• A qualified opinion

• An adverse opinion

• A disclaimer of opinion

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As per paragraph 2 of ISA 705 (Revised) the decision regarding which type of modified opinion
is appropriate depends upon:

a) The nature of the matter giving rise to the modification, that is, whether the financial
statements are materially misstated or, in the case of an inability to obtain sufficient appropriate
audit evidence, may be materially misstated; and b) The auditor’s judgment about the
pervasiveness of the effects or possible effects of the matter on the financial statements.

Qualified Opinion

Paragraph 7 of ISA 705 (Revised) states that the auditor should express a qualified opinion
when:

(a) The auditor, having obtained sufficient appropriate audit evidence, concludes that
misstatements, individually or in the aggregate, are material, but not pervasive, to the financial
statements; or (b) The auditor is unable to obtain sufficient appropriate audit evidence on which
to base the opinion, but the auditor concludes that the possible effects on the financial statements
of undetected misstatements, if any, could be material but not pervasive.

Adverse Opinion

As per paragraph 8 of ISA 570 (Revised), the auditor should express an adverse opinion when
the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements,
individually or in the aggregate, are both material and pervasive to the financial statements.

Disclaimer of Opinion

As per paragraph 9 of ISA 570 (Revised), the auditor should disclaim an opinion when the
auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion,
and the auditor concludes that the possible effects on the financial statements of undetected
misstatements, if any, could be both material and pervasive.

If for example, auditors are not able to obtain sufficient appropriate audit evidence regarding the
existence and condition of inventory due to the current restrictions imposed by Covid-19, then
depending on the materiality and pervasiveness of this to the financial statements as a whole,
auditors will need to decide which modification in the their opinion is more appropriate.

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The Malaysian Institute of Accountants has issued a publication entitled Covid-19: Frequently
Asked Questions on Auditing, which also refers to the impact on the auditor’s report pertaining
to the inability to obtain sufficient appropriate audit evidence, referring to similar points noted
above.

In the UK, the FRC has issued guidance regarding modifications of Independent Auditor’s
Opinions and Reports in the current environment, useful for all practitioners.

The role of audit committee

The impact of the COVID-19 pandemic, together with a company’s response to the pandemic,
will have implications for all aspects of the audit committee. The role of audit committee are
described below:

1. CFOs and Audit Committees need to consider the impact on accounting conclusions and
disclosures and the resulting impact on financial reporting communications to the market.
2. Virtual meetings will need to be carefully choreographed by the Audit Committee Chair
and good practices such as “pre-meetings” with key participants should be undertaken.
Additionally, the committee may have challenges in being quorate in the unfortunate
situation of members falling ill.
3. The responsibility of the management of a company is to present a fair, balanced and
understandable assessment of the company’s position and prospects extends to interim
and other price sensitive public records and reports to regulators. Audit committees
should ensure that they have appropriate oversight of this communication process and
should challenge executive management where communication is not achieving the “fair,
balanced and understandable” standard.
4. As a result of the uncertainty associated with the economic impact of the COVID-19
pandemic, entities are likely to face challenges in selecting assumptions and developing
reliable estimates. Audit committees will need to consider and understand all available
information supporting the judgements and estimates, as well as whether all applicable
disclosure requirements have been met.

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5. Because of the Covid-19 pandemic fuller discloser is required in the current
circumstances. From the disclosures on material judgements and estimates, to the
principal risks and uncertainties, the longer-term viability statement, dividend policy and
disclosures on executive pay –all should be considered as a package of disclosures
explaining how COVID-19 is impacting the business and its financial position. The audit
committee should take a close look at the procedure the company is following in
disclosing these matters and whether the company is disclosing these matters properly or
not.
6. The audit committee should assess the changes in audit procedure the auditor performed
in obtaining sufficient, appropriate audit evidence in support of their audit opinion.
7. The auditor has to collect audit evidence in such away that the audit committee must be
satisfied that there has been appropriate consideration of both the sufficiency and
appropriateness of the audit evidence produced.
8. The auditor should engage early with the audit committee to explain the implications of
their proposed report and consider whether there are other procedures that could be
undertaken which could mitigate any modification either fully or in part.
9. Internal audit has a crucial part to play given its role of providing independent, objective
assurance related to the operating effectiveness of risk management, governance, and
internal control processes. Audit committees should make it a priority to understand if the
impact of the disruptions caused by the pandemic indicate that an event-driven
reassessment of audit risk is needed. Whether it is or not, they should ask management to
take a fresh look at their internal audit annual plan and determine if it is still fit for
purpose. They will also want to focus on ways to optimize internal audit’s contributions
in this new environment.
10. It is important for the audit committee to continue to focus on the culture of the
organization and their role in deterring fraud and as a lot of employees are working from
home audit committee has to take into account the ethics-and-compliance-related matters
of the company.

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Technology used in conducting audit

Because of covid-19 pandemic clients are facing numerous challenges to remain in business and
prepare financial statements given the impact of COVID-19, auditors also have practical
difficulties, ranging from accessing client information to additional time needed to assess the
impact of COVID-19 on asset impairments, uncertainties related to going concern and
subsequent events disclosures.

Technology powered by artificial intelligence (AI) as well as other technologies, can also help
the accounting profession master the challenges posed by COVID-19.

Auditors are already using various information and communication technologies (ICTs) –
spreadsheets for checking samples, macros for running analyses and emails to engage with
clients. However, these only allow them to work remotely to a limited extent. To fully transition
to remote work, existing ICTs need to be enhanced with additional technological solutions that
facilitate remote communication within the audit team, information gathering, reconciliation of
transactions, and financial analysis and interpretation.

A range of technologies are available that can enable audit team members to collaborate
effectively in real time, even when working remotely in different locations. Some are used by
technology providers) to help auditors substitute in person or on-site fieldwork and enable
continuity in meeting their reporting obligations. Various types of technology are being used to
facilitate the work of an auditor. Some of them are discussed below:

1. Auditor can use excel-based tools to check the financial errors more efficiently rather
than checking the financial statement manually which is very time consuming and audit
quality is at risk of being compromised.

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2. Auditors can use video conferencing software like Zoom to virtually connect with the
client and the other members of the audit team.
3. Auditors can use drone technology to virtually visit the factory of a company and
inventory warehouse rather than visiting physically which is basically impossible because
of COVID-19.
4. Auditors can use software solution like CaseWare which allows for and supports cloud
accounting, data import, data mapping, data validation, AI-based testing, AI-based
analysis, automated preparation of financial statements, data visualization and
compliance.
5. Software like Financials Checker automates the internal checking of financial statements,
annotating the primary financial statements to the notes in under 30 minutes, which
manually, can take up to a day in some instances. Financials Checker is not limited to
financial statements and can be used on any report that contains numbers within tables
and internal referencing.
6. Auditors can use Microsoft Power BI which is an enhanced Excel capability with
hundreds of data visualizations, built-in AI capabilities, tight Excel integration, and
prebuilt and custom data connectors.
7. To identify risk appropriately auditors can use MindBridge Ai Auditor which is an AI-
powered risk assessment platform able to analyze 100 percent of transactions. Ai Auditor
identifies unusual transactions by looking at transaction flows between all accounts and
evaluates them.

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Conclusion

The impact of COVID-19 Pandemic is changing the dimension of work of many professions
and audit profession is not exception to it. Audit profession is also changing to keep pace
with the ever-changing world. To continue as a viable and relevant field, the auditing
profession, as any profession, cannot resist advances that may further the efficiency or
effectiveness of the process, or it will find itself no longer viable. The current environment
provides us with an important opportunity to accelerate our efforts to rethink how auditing is
performed today and in the future. It is important for all parties, including regulators,
standard setters and practitioners to remain engaged and work together to identify issues and
proposed approaches. As the nature of audit work is changing auditors need to be
technologically advanced to meet the requirements of audit profession. Auditors will have to
exercise significant professional judgment and professional skepticism and must remain
focused on their ethical responsibilities and the public interest. The IAASB’s International
Standards on Auditing (ISAs) are principles-based and continue to apply in full. Auditors
also need to consider national legal and regulatory requirements. The application of the
IESBA International Code of Ethics for Professional Accountants (including International
Independence Standards), including compliance with the fundamental principles (integrity,
objectivity, professional competence and due care, confidentiality and professional behavior),
is key to preservation and expansion of public trust in all auditors. At last auditors have to
remain up to date about the changes made by the IASB so that the user of the financial
statement gets the transparent information required to know the true scenario of the company.

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