Auditing Implications of the War in Ukraine – Part 3


In last week’s blog we looked at some of the key implications that may impact on the work of auditors. In the previous week’s blog we looked at the implications in circumstances where audit clients are not directly impacted. This week we conclude with some final matters for auditors to consider.

Going concern

Management of affected entities, especially those with operations in Ukraine, will need to evaluate the impact on the going concern assessment and revisit this. The auditor will also need to show increased professional scepticism when making going concern judgements to verify that management has taken all the relevant factors into account. Some of these factors are highlighted below.

Supply chain issues

Some companies have stopped trading with Russia and therefore there will be an unavoidable impact on supply chains. We have already seen higher fuel prices which are likely to affect many companies’ cost base, and cause transport disruption. Auditors will need to document their assessment of the impact on clients’ business models, cash flows, and their ability to continue as a going concern. electronic

Currency valuation

Sanctions have triggered a devaluation of the Russian Rouble and there are consequent implications for the Belarussian Rouble. Translation of Roubles to other reporting currencies may lead to material exchange rate losses for affected companies.

Insurance cover

In some circumstances insurance cover for companies may be restricted, especially if insurance policy exclusion clauses state that a loss event is considered to be an ‘Act of War’.

These circumstances may not be restricted to the use of conventional weaponry, but also retaliatory cyber-attacks. Trade credit insurance may also be more difficult to obtain and companies/ their auditors need to take this into account.

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We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.

We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.

To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.

For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.