LONDON (Reuters) - Britain’s Financial Reporting Council has warned accounting firms may need to revamp procedures and take extra time to complete high quality audits as the coronavirus pandemic grips.
In a statement on Monday, the watchdog said it was concerned the current situation “should not undermine delivery of high-quality audits” and that company assessments should fully comply with required standards, even if firms had to delay reporting of company financial figures as a result.
“Auditors will need to engage with entities they audit to ensure they set clear expectations as to the level of disclosure they expect to see in annual reports to communicate the impact and risk of COVID-19 on the company,” the FRC said.
The coronavirus outbreak has spread rapidly around the world, killing over 5,800 and infecting more than 156,000 people, putting many countries on virtual lockdowns and severely disrupting global economic activity.
The FRC said it was holding weekly calls with the largest UK audit firms and will continue to monitor the situation carefully to ensure any issues are being appropriately managed.
It said auditors would need to consider the impact of coronavirus on how they gathered sufficient, appropriate audit evidence and how the group auditor proposes to review the work of component auditors, who contribute information to the overall audit.
The FRC also said audit firms would need to consider how the pandemic might impact their assessments of the prospects of their clients and the adequacy of disclosures made about the impact of COVID-19 on their businesses.
In some cases, this might require auditors to reassess key aspects of their audit as a result of the fast-changing situation, and demand further evidence from management, the FRC said.
Reporting By Sinead Cruise, editing by Lawrence White