The Challenge of Signing Off on Audits Remotely

The Covid 19 crisis is making things difficult for companies and accounting professionals right now as auditors who would traditionally be out checking inventory and stock are stuck at home thanks to the government’s instructions to stay in place.

Some help has been forthcoming thanks to British regulators allowing companies an extra two months in which to publish their annual financial statements. However, there are still plenty of complications for accounting professionals to overcome when it comes to efficient auditing. This is especially important given the fact that the Financial Reporting Council (FRC) has indicated just how important accurate and flowing reporting and auditing still is at this difficult time.

The potential use of camera evidence

Some auditing and accounting professionals are looking into different ways to complete auditing processes. One type of potential assistance is the use of live camera content. For instance, this could be useful for checking inventory such as vehicles and their vehicle identification numbers.

Using this type of technology could be a good way of allowing accounting professionals to undertake auditing work without having to breach lockdown rules. However, there are limitations to how useful cameras can be.

Limitations to the scope of audits

The coverage and scope of an audit is laid down in government regulations. These regulations need to be adhered to, even amidst the chaos that is being caused by the Covid 19 crisis.

The use of cameras is not sufficient to meet the full scope of audits. For instance, it’s only possible to check on the legitimacy of workforce numbers in person. It’s also difficult for auditors to fully engage, and ask and answer questions, when they are not on site.

Given these issues, it seems likely that some auditors will delay on completing reports until the ongoing situation becomes somewhat clearer. It’s also possible that some companies will complete their accounts while noting that there are potential “qualifications” to be considered. The concern that companies may have about doing this is that it could be off-putting to investors who may decide to sell their shares.

In summary

Signing off on audits in the current environment is a difficult task as auditors are unable to visit premises in person due to the restrictions imposed as a result of the Covid 19 pandemic.

It’s possible that cameras will be used as part of the solution. However, they will not enable audits to be completed in full. The FCA has issued instructions which mean that auditors are required to critically examine their processes and report on areas that can be completed remotely, how technology can be used and where there may be a need for additional on-site work at a later date. Once auditors have undertaken this work, the way forward may become clearer. Of course, the country’s position over Covid 19, in general, will also have a major influence on the issue and on how and when auditing processes can be completed in full.

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