Question

discuss how COVID-19 will affect audit planning, execution and reporting :

1. audit planning and strategy

2. audit opinion

Answer 1

1. Impact of Covid-19 in Audit planning and strategy:-

Auditor has to determine the risk level of the organization from Covid19. Some industries are vulnerable like automotive industries and some are performing well like FMCG industries.

The auditor will devise a strategy to check if the organization will be able to continue as going concerned.

Auditor will hire specialists who can advise them on the Covid-19.

Strategies will be formed to collaborate with other auditors about their ley findings.

The audit scope will be modified to bring the focus areas in their bucket.

Training the employees to use online tools to do the audit for example, they may perform audits via Zoom or Skype.

2. Impact of Covid-19 in audit opinion.

COVID 19 has brought focus on the following areas:-

1. The ability of the business to continue as a going concern.

2. Judgment and estimates with respect to recognition of impairment because ash flow to be generated from future cash flows from the use of assets will be impacted.

3. The expected credit loss method will be used to determine the bad debts because many customers will not be able to pay their debts.

4. The ability of businesses to do work from home for employees in case of any lockdown.

If the auditor is able to audit the focus areas as mentioned above then he will give an unqualified opinion.

If the auditor is not able to audit the focus areas as mentioned above then he will give a qualified opinion if the impact is not huge. Otherwise, he will give adverse opinion.

If the auditor is not able to complete the audit due to the absence of records or insufficient cooperation from management, then he will issue a disclaimer of opinion.

__________________________________________END_____________________________________________________

Hi mate,

I would be grateful to you if you can provide a thumbs up and write one beautiful comment. It will improve my rating and let me continue my journey here.

In case of doubt, please comment. I will consider myself fortunate if I can help you.

All the best for your bright future.

Be safe from the corona. Wear a mask before going out and wash hands frequently especially before touching the face