IRBA launches newsletter relating to audit implications of Covid-19

CEO Bernard Agulhas: The newsletter will contain key areas of guidance around Covid-19 impact.

The Independent Regulatory Board for Auditors (IRBA) has issued a newsletter relating to the implications of the Covid-19 outbreak on audits and auditors.

IRBA CEO Bernard Agulhas said: 

“This outbreak presents an opportunity for the audit profession to reflect on the recognition of its public interest responsibility, and to demonstrate its independence and resilience to external factors. Auditors should continue to apply the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.”

Key areas of guidance include: 

  • Auditors have to discuss the disruption of business operations and financial reporting processes with clients to understand whether there is an impact on the client’s reporting timetable and the audit processes. 
  • Auditors need to reassess the risks of material misstatement of the financial statements, because the information on which the initial risk assessment was based might have changed. For audits in progress, auditors will have to revise their risk assessments and modify their planned audit procedures. 
  • The travel restrictions and remote working arrangements might make it difficult for auditors to access clients to perform audit procedures and they might be able to get the right audit evidence. 
  • For group audits, it might be difficult for component auditors located in affected countries to get the right audit evidence, which might delay the completion of component audits.
  • Auditors have to obtain the right audit evidence to determine whether companies are able to continue during the strained economic conditions. 
  • Audits also have to consider the impact of events that occur after the date of the financial statements.

In addition to these areas, auditors also have to consider the implications of the virus on the auditor’s report. 

IRBA said that a dedicated Covid-19 webpage has been added to www.irba.co.za, which will form a central repository of information that has been released both locally and internationally in relation to the outbreak and the implications on audits and auditors.