The Financial Reporting Council has directed external auditors to apply alternative procedures to obtain audit evidence in order to reduce the impact of the COVID-19 pandemic on the audit process.
The directive was contained in a document titled, “Guidance for External Auditors and Matters to Consider during COVID-19 period”.
Nothing that additional time may be required to document, review audit engagements due to some measures taken by Federal and state governments in collaboration with ministries, departments and agencies (MDAs) to contain the scourge of COVID-19, the Council advised external auditors to be flexible in carrying out their audit assignment.
In a statement explaining highlights of the guidance, FRC stated: “The guidance highlights the implications of the COVID-19 outbreak on audits and auditors in Nigeria and actions to be taken when carrying out audits during the current Covid-19 crisis in the following areas: New Audit Engagement; Audit Planning, Execution and Reporting; Assessing the Impact of COVID -19; Events after the reporting date; Going concern; and Audit of 2020 financial statements (Audit and Accounting issues).
“It addresses the difficulties audit firms currently face in completing all appropriate audit steps as a result of the lockdown in Nigeria occasioned by the need to contain the spread of COVID-19 which has occasioned delay in the completion of audit and approval of Financial Statements by the Board of reporting entities.
“The guidance directs practitioners to demonstrate flexibility in their work pattern, which includes work from home arrangements, use of video/telephone conferencing, and electronic evidence. However, Auditors should apply alternative procedures if they are still not able to obtain sufficient appropriate audit evidence as a result of differing levels of infrastructure in the country. If Auditors are still not able to obtain sufficient appropriate audit evidence, then they should consider modifying the opinion on the financial statements in line with ISA. The audited financial statements containing the modified opinion must then be brought to the Council’s attention in accordance with the provisions of the FRC Act.
“Where the impact of Covid-19 is, in the auditor’s professional judgment one of the most significant matters having an impact on the audit of the financial statements, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team, then the auditor considers reporting this as a key audit matter for entities mandated to report key audit matters.”