The XRB website has useful information on how to incorporate COVID-19 into your audit. We recommend that if you have not done so already you read their COVID auditing implication section and the attached link to articles and websites.
We have reviewed the XRB Audit Implications and IAASB guidance and have developed two features to help. In the planning (D) section an optional checklist has been created to help you with prompts for identifying and assessing the effects of COVID-19 for example:
- Effects on Audit Deadlines
- Impact on control environment and planned reliance on controls
- Inability to attend stock takes
- Regulatory factors and the appropriateness of assumptions for accounting estimates
- Identification of subsequent events
- Reconsideration of the appropriateness of the use of the going concern
- Group audits
COVID-19 Emphasis of Matter Paragraphs
Auditors should consider whether an Emphasis of Matter paragraph for COVID-19 issues is appropriate. We have added a prompt on the Audit Report page (Z section) as follows:
Here is a simple example of a COVID-19 EOM paragraph:
We draw attention to note xxx in the Financial Report, which describes events subsequent to year-end and specifically the possible effects of the future implications of COVID-19 on ABC Limited’s future financial position and performance. In our view this issue is fundamental to users’ understanding of the Financial Report. Our opinion is not modified in respect of this matter.
Emphasis of Matter – NZ Schools (OAG) Audit
The NZ OAG has specified that an EOM paragraph must be added to school audits as follows (amended as appropriate where reports are qualified):
We added this paragraph so that it will automatically be included in all school audit reports.