The war in Ukraine is an evolving human tragedy. In last week’s blog we looked at some of the key implications that may impact on the work of auditors, even if one’s clients have no immediate connections with Ukraine/Russia. This week we continue with a quick reminder of some pertinent topics for auditors to consider.
Non-compliance with laws and regulation (NOCLAR)
Auditors fulfilling their responsibilities under ISAs (especially ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements) with respect to laws and regulations will be auditing and reporting in a constantly changing environment. This may be the case right up to the point of signing the auditor’s report, depending on the period end of the entity and timing of the audit. Auditors will need to be vigilant and maintain regular communication with management in order to monitor NOCLAR up to the signing of the audit report.
It will often be difficult for management to ensure that they have complied with laws and regulations, let alone articulate how they have complied.
Post balance sheet events
For companies with 31 December 2021 year ends, the war in Ukraine would be considered a non-adjusting event, because the conditions did not exist at the end of the reporting period. For 28 February 2022 period ends and later, the impact of the war is an adjusting event.
Management’s disclosures about material non-adjusting events, and related estimates of its financial effect, must be appropriately disclosed in the notes to the financial statements and auditors will need to check these disclosures.
We will conclude our review of these issued in next week’s blog.
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