CFOs share their virtual audits tips and tricks in CFO Community Conversation
CFOs agree that auditors need to adapt their processes to the new virtual world brought on by Covid-19.
On Wednesday evening, 26 August, South Africa’s leading finance professionals gathered online to talk about the new way of auditing, virtually.
For the 19th edition of the CFO Community Conversation, Coronation Fund Managers CFO Mary-Anne Musekiwa, Investec Life CFO Roxane Leita and Equites Property Fund CFO Laila Razack, who all recently went through a virtual audit, shared their experiences and advice with the attendees who had not yet gone through theirs.
Many of the CFOs said that they had already digitised most of their processes before Covid-19 and lockdown, and that this helped them when it was time for auditing. But they all agreed that auditors needed to adapt their processes to the new virtual world we find ourselves in because of the Covid-19 crisis.
Equites Property Fund’s year end was in February and their auditors were PwC. “We’d started gathering our information, but the auditors were supposed to come in at the end of March, when lockdown was announced,” Laila said.
Luckily Equites had already converted most of its documents to online copies. “We started using PwC’s system, where, as we completed deliverables we would mark documents ‘ready’ and they could then review it,” she said. “The only challenge was that auditors wanted to see a sample of original documentation, but in some instances those weren’t readily available as we had started keeping authenticated digital copies instead of paper files.”
She explained that the auditors and their approach wasn’t entirely geared up for that, so she had to start sourcing the hard copy documents and open the offices on the Saturday before signing date so the auditors could review them. “We’ve subsequently discussed this and they will adopt their audit approach in the future.”
CFO Dorette Neethling also explained how Adcock Ingram not only went through a new way of auditing, but had to work with new auditors too. “Not only did we had to cope with an audit and reporting season during lock down, but we also had a change of auditors, compounding the challenge as they don’t know your environment, and both the teams (the company and the auditor) didn’t really know each other,” she said. “Our planning also had to include reporting to our controlling shareholder for 11 months of the year, adding another dimension to your workload.”
However, she said that she is very proud of her team, as they adapted fairly easily to all the changes and challenges.
“I have three points of advice: planning, people, and people,” she said. “Planning of any audit of a listed entity is extremely important, and I think with virtual audits, even more so.”
Adock Ingram’s planning for the transition to the new auditors included the preparation of a file continuing important information, comprising items such as the accounting policies adopted by the group, details on any empowerment schemes or judgements with regards to intangible assets or stock provisions.
“This was handed to them shortly after their appointment, which assisted the transition process,” Dorette said. “Also, addressing any potential issues at the start of the audit, saves a lot of time and debate towards the end of the process.”
The two people points relate, firstly, to the people in your team and your relationships with them. “I believe you have to empower and trust them as they know what is expected of them and don’t need any micromanagement,” she explained.
The second point of people relates to your external service providers, including your sponsor and communications agency, among others. “You really need to build strong relationships with them over time, as they ultimately form part of the team bringing your results together for publication to the investor community.”
Similar to the challenge of working with new auditors, UCT’s entire council changes every four years per its statue, which fell at the end of June this year.
“Given it is our equivalent of a corporate board, we had no option but to make sure we met our original deadlines,” said UCT director of group finance Hardy Moritz. “Given the council also appoints our audit committee, we also ran the risk of an entirely new audit committee coming into a very complex business.”
UCT experienced this situation four years ago, with no continuity at all from its previous audit committee, and were left with new members wondering what may have caused this.
“What helped with the virtual audit, was that our entire finance team as well as senior members of our external audit team from EY, were already used to working remotely and online due to us learning to work away from the office during #FeesMustFall,” Hardy explained.
The CFOs agreed that, because of remote working, their first-year audit students were struggling to understand a lot of the work behind their audits. They weren’t able to get the training they normally did, where a second year would sit with them and explain the processes.
Despite the obvious challenges of a virtual audit, the CFOs agreed that being able to jump on a Zoom call made it easier for them to communicate with their auditors and resulted in a quicker turnover. Some CFOs even closed their books before the expected closing date.