Challenges for Auditors During the Pandemic – Part 1


The Coronavirus (COVID-19) has caused auditors to develop new techniques in carrying out their audit work, mainly involving greater use of technology. In this, the first blog of our three-part series, we will look at some recent audit monitoring inspection reports that have highlighted the most common problem areas for auditors.

Stock Attendance (ISA 501)

Many firms have not been able to attend clients’ premises for inventory counts. In these circumstances the auditor must attempt to perform alternative procedures e.g., where the client takes a live video call from the auditor and ‘walks’ the auditor remotely through the stock count location.   Details of alternative procedures like this, and the auditors’ conclusions following the procedures, must be documented on the audit file.  If adequate alternative procedures cannot be performed the audit file needs to document a consideration of the impact on the auditor’s report.

Where audit clients have not traded for significant periods of time, the audit file needs to show some consideration of potential stock impairment or obsolescence. A sceptical approach by auditors is always prudent. The ICAS has issues excellent guidance on attendance at stocktakes during the coronavirus outbreak. It’s worth looking at.

Fraud (ISA 240)

Audit files should fully document consideration of fraud (including the scope for fraud involving Government Covid subsidies/grants), especially where the audit firm may not have direct access to its audit client and/or where audit clients may not have direct access to their customers.

Common findings on monitoring visits include poor or inadequate completion of fraud checklists with no additional consideration documented regarding:

  • fraud risk assessment;
  • insufficient documentation of discussions between the auditor and management;
  • lack of evidence of the auditor’s assessment of fraud and
  • lack of evidence of the auditor’s conclusions regarding fraud risk.

Accounting systems and controls (ISA 315)

The Coronavirus (COVID-19) has challenged client’s accounting systems and controls like nothing has ever before.

Audit firms need to consider whether the audit clients’ accounting systems and controls remain appropriate during Covid-19, especially with few or no client staff working from their office location.  A common failing at monitoring visits is the carrying forward of systems notes from prior years with little evidence of written assessment of the impact of the Coronavirus on the accounting systems and controls. The notes on file must take account of the impact on the client’s operations of remote working and/trading in an online environment.

See Part 2 of this blog next week.