Auditing in a Virtual World: You Have Questions…We Have Answers!

With demographic changes and technology advances, virtual client service is not new to our firm. From online consultations to remote employees, we have proven that high quality service isn’t tied to location anymore.

In the wake of COVID-19, your engagement is no exception. With advances in workflow tracking, communications software, and file-sharing technologies, we can perform your audit entirely from your engagement team’s home offices. Even though we’re well prepared to handle your audit remotely, however, we recognize that you may need some help. So we are here to answer your questions.

Q: Can you really do a high quality engagement without actually being onsite?

A: Absolutely! We always follow professional standards and industry best practices regardless of location.

Q: Will I need a major computer/tech upgrade?

A: Not at all. The technology requirements are pretty minimal – just some webcams and collaborative software such as Skype, Zoom, FaceTime, or WebEx will enable us to continue having face-to-face conversations and even the ability to screen share as if we were there with you in person. Additionally, most of our clients are already familiar with our Sharefile portal for secure file sharing. As long as you have access to your electronic documents, the process for uploading them to us is the same. You should also consider the security of your network while telecommuting.

Q: What if my audit started before COVID-19 but hasn’t yet finished?

A: Your engagement team is working behind the scenes to wrap up your audit and should be communicating with you as work progresses. Expect some additional questions related to how COVID-19 has impacted your business or organization so far. We need to evaluate whether there have been major impacts that require an additional subsequent events disclosure to the footnotes of your financial statements.

Q: What if my audit hasn’t started yet? Will it be delayed?

A: If your audit timing has been communicated to you, we commit to completing the work following the same timeline. We are also working on scheduling future engagements and will be communicating with clients about summer and fall dates shortly. However, if you run into circumstances that require you to delay the timing of your audit, please notify us ASAP so we can reschedule.

Q: How will the virtual audit planning process be different?

A: We will be devoting extra time behind the scenes to develop the audit plan based on the information we gather from you during our planning conversations. The primary area that we expect to see differ on your audit relates to our evaluation of your internal controls. If your fiscal year ends March 31 or later, plan on additional discussions regarding how your internal controls have changed. You’re likely processing financial information in ways you haven’t in the past if employees are not coming into the office. So we’ll need to obtain an understanding of your revised processes to determine whether they’re designed effectively. This is an area where video conferencing, screen sharing and cameras will give us added comfort.

Q: How will the audit fieldwork process change?

A: We will need all requested documents to be provided in electronic format. We might also proactively perform alternative procedures if certain standard procedures to which you’re accustomed could be ineffective (e.g., confirmations, inventory observations, and reliance on SOC 1 reports.) We will take a deeper look at investment valuation, loan covenants and accounting estimates to determine if circumstances require additional transparency in your footnote disclosures and/or adjustments to amounts reported.

Q: How will the audit completion and reporting process change?

A: The users of your financials will be watching how your organization is impacted by COVID-19. Throughout the entire audit process, we will get updates from you about the impact on your current and future operations. You’ll need to consider disclosures related to direct effects on the results of operations, about risks and uncertainties about the impact of COVID-19 on future periods, and the current and future impact on liquidity and resources.

If we determine the current or future impact is material, we may also add an emphasis of matter paragraph to our audit report. This paragraph simply brings a particular portion of the financial statements to the readers’ attention. It does not alter our opinion on your financial statements.

Q: What if we can’t get you everything you need to complete the audit?

A: We’re working on being innovative in our approach to most effectively achieve our audit objectives. To the extent possible, we will do all we can with alternative procedures to give us reasonable assurance. If there are barriers that prohibit us from completing the audit, we will communicate those with you up front.

If your audit has a third-party deadline, we recommend you communicate with your banks and other users of your financials to request an extension. Many regulatory bodies have already provided extensions, and others have indicated plans to do so. For up-to-date regulatory extensions, visit our COVID-19 Resource Center or your regulatory agency online resources.

Our Assurance Services Team is here to help you make your virtual audit as simple and seamless as possible. Whether we’re across the table or maintaining a safe distance by serving you virtually, with James Moore, you will get the same personal touch and attention to detail. In the meantime, please stay safe and healthy.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.