Course ID: APCYE

Audit Planning for Calendar Year End and How To Audit in a COVID-19 Environment

As we all know, audit planning is not a simple process. It involves a high degree of consideration of a client’s industry, regulations it has to comply with, its operations and administration, availability and assignment of a CPA firm’s resources, engagement timing, etc. Fortunately, through proper planning, we may not only be able to be more efficient in our audit execution, but also provide clarity to practitioners regarding the importance of proper risk management techniques. Complying with all applicable AICPA Professional Standards when executing audit engagement to reduce professional liability and reputation risk is essential!

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

The full impact of the COVID-19 outbreak continues to evolve. As such, it is uncertain as to the full magnitude that the pandemic will have on organizations’ financial condition, liquidity, and future results of their operations. Organizations’ management are actively monitoring the situation on their financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, companies are not able to estimate the effects of the COVID-19 outbreak on their results of operations, financial condition, or liquidity for fiscal year 2020. If the pandemic continues, it could have a material adverse effect on companies’ results of future operations, financial position, and liquidity in fiscal year 2020.

This session will provide external auditors both practical and insightful perspectives on how to navigate an audit engagement of a private company in 2020. You’ll learn which areas of the audit have increased in risk due to COVID-19 as well as what alternative audit procedures are available to engagement teams in circumstances where traditional audit procedures are not possible. You’ll acquire a clearer and deeper understanding of what will need to be done in order to properly perform audit engagements under this difficult environment in accordance with Professional Standards.

Learning Objectives

This session will address the consideration of professional liability lessons learned from the following sections of the AICPA Statements on Auditing Standards (SASs):

Proper Time for Planning (AU-C §§300.02 and 300.A2): The information learned during planning should be applied throughout the engagement to achieve appropriate conclusions.
Risk assessment (AU-C §315): Identifying areas of greatest risk early in an audit can allow for additional testing or analysis, reducing the likelihood of error that may result in a professional liability claim.
The Right Engagement Team (AU-C §300.05): Assigning complex or difficult areas of an audit to the appropriate level of expertise, depth of experience, or extent of review is an important step in reducing the likelihood of an error.

Additional considerations:

Invest the time: Proper planning is an investment in time that is intended to pay dividends in later phases of the engagement. Identifying a potential issue or complex audit area at the start of the planning process could save time later in the audit.

Flexibility: Planning is a guide for work to be performed, not a step-by-step instruction manual. Flexibility creates a positive tone that can be established in planning and carried through to issuance. The audit plan and strategy developed at the start of the engagement should be updated and adjusted based upon information gathered throughout the engagement.

Identify areas of the audit where risk has gone up significantly due to the pandemic.
A discussion of viable alternative audit procedures to perform
Addressing potential reporting implications

Major Topics

Proper planning of an audit engagement during the pandemic
Changes in the risk assessment procedures in response to COVID-19
How to gain an understanding of an organization’s internal control environment remotely
Properly communicating with management, board of directors and those charged with governance
Increase in going concern assessments
Significant financial reporting and disclosure implications

Advanced Preparations

None

Who Should Attend

CPAs and accountants in public practice

Fields of Study

Auditing

Prerequisites

General knowledge of AICPA Professional Standards

Provider

Business Learning Institute

CPE Credits

4.0

Level

Intermediate

Markets We Serve