Purpose and professional-standard status
The bulletin reminds public accountants that pandemic disruption does not remove the obligation to deliver quality audits under prescribed standards. Standards are principles-based and do not prescribe one method for every challenge, allowing appropriate technological approaches while preserving reasonable assurance. The guidance supplements rather than replaces professional standards, is not a set of ACRA rules, and includes considerations used in evaluating audit work. Auditors must keep monitoring new developments instead of assuming an initial response remains sufficient.
Risk assessment and materiality are iterative
Update risks relating to asset impairment, contractual breach or modification, covenant breach, liquidity and going concern, fraud pressure or weakened controls, and errors from changed systems or processes. Consider whether unusual impairment or retrenchment provisions affect the materiality benchmark and whether separate thresholds are needed for particular transaction classes, balances or disclosures. New facts, changed circumstances or improved understanding during the audit may require revision of overall or specific materiality under SSA 320. The process is continuing rather than completed at planning.
Revise procedures when controls or access change
High-quality work may take additional time. Controls not functioning under remote work can require more substantive testing. Inability to attend year-end inventory counts requires alternative procedures, with the source referring to ISCA FAQ 7. Delayed closing can require revisiting earlier audit conclusions. Each response depends on the client’s facts; alternative evidence must be assessed for quality and reliability. If sufficient appropriate evidence still cannot be obtained, consider the need for a modified opinion rather than assuming remote procedures solve every limitation.
Electronic and verbal confirmations need corroboration
Remote auditing still requires sufficient appropriate evidence and professional judgement about reliability. Electronic confirmations may replace disrupted hard-copy channels, but their authenticity may require extra procedures. Verbal responses can be a prompt way to contact debtors or creditors, yet verbal confirmation alone is insufficient. Depending on circumstances, obtain a written response such as an email or other corroborating evidence. The bulletin refers to ISCA evidence and bank-confirmation FAQs and ACRA’s 2010 external-confirmation bulletin.
Estimates and group evidence require special attention
Focus on impairment of equipment, intangibles, investments and receivables, including ECL; inventory obsolescence; restructuring, contractual-penalty and onerous-contract provisions; and fair values. Group auditors should consider procedures at group level and alternative ways of reviewing component work papers where physical access is unavailable. Alternatives must comply with laws in the component auditor’s jurisdiction. The source points to AGS 12 and ACRA’s 2015 group-audit bulletin. Failure to obtain sufficient appropriate evidence may constitute a scope limitation even when caused by travel restrictions.
Subsequent events depend on the reporting date
Assess adjustment or disclosure under FRS 10. For most entities reporting at 31 December 2019, the outbreak was non-adjusting; this could differ for later dates. Examine actual factors and circumstances rather than automatically treating every later pandemic consequence alike. The source refers to ISCA FAQs 1 and 2. This is the historical assessment framework from 2020, not a classification rule applicable regardless of year-end.
Going concern and the basis of accounting are separate questions
Management considers all available future information for at least twelve months from the balance-sheet date, without limiting the analysis to that minimum. Auditors should challenge assumptions and obtain evidence, considering both negative and positive pandemic effects. Where a material uncertainty exists but going-concern accounting is appropriate and disclosure is adequate, the source requires an unmodified opinion; this does not eliminate the applicable going-concern reporting requirements. Where the basis itself is inappropriate, an adverse opinion is required. Close-call cases warrant the 2016 reporting and going-concern bulletin’s guidance.
Opinion consequences distinguish scope limits from misstatements
Before reporting, check revised estimates, legal or regulatory effects and sufficient evidence for balances or significant components. A material and pervasive scope limitation, such as inability to obtain component evidence or alternatives, requires a disclaimer. A material but non-pervasive evidence limitation, such as essential unanswered confirmations with no sufficient alternative, can require qualification. Established misstatements instead lead to qualification when material but not pervasive, and an adverse opinion when both material and pervasive. An attention-drawing paragraph or modified opinion depends on the circumstances; it is not a uniform response to the pandemic.
Key audit matters and internal controls
The outbreak itself is not automatically a key audit matter, but its effects and the areas requiring the most significant audit effort can affect KAM selection and explanation. Assess remote-working changes to controls, newly implemented or modified procedures, and controls no longer effective, then adapt the planned approach. The document points to ISCA FAQ 13 for controls. Risk and reporting should reflect the entity’s actual response rather than a generic COVID-19 paragraph.
Historical government support requires appropriate accounting
The bulletin discusses property-tax rebates for qualifying non-residential properties for 1 January to 31 December 2020. Its footnote states that legislation passed on 7 April 2020 required landlords to pass rebates fully to tenants without conditions. Examine both landlord and tenant accounting under the relevant lease and government-grant rules, with ISCA FRB 5 as a reference. JSS wage support, enhanced through the Resilience and Solidarity budgets and later announcements, requires appropriate receivable accounting, with FRB 6 cited. The historical schemes and budget references do not establish that the same relief is available now.
Governance communication and firm quality controls
Discuss significant impairment or going-concern judgements, disclosures, control weaknesses, contentious issues and audit delays with governance bodies. Agree a reasonable timetable that preserves quality. If a modified opinion is proposed, explain its implications and consider whether later procedures could mitigate it fully or partly. Firms should review documentation and review-process structures, information access and virtual discussion arrangements, mandatory consultation with qualified specialists and the scope of engagement-quality or independent reviews for pandemic-sensitive judgements. The bulletin’s nine footnotes provide related standards, ACRA bulletins, ISCA material and support-scheme sources; its concluding message is continued scepticism and quality despite evolving challenges.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
Read the official PDF ↗