Audit Policy Update

• Coronavirus crisis: Implications on reporting and auditing
• CEAOB on the impact of Covid-19 on audits of financial statements
• IAASB guidance for auditors during the coronavirus pandemic
• UK: Business Committee launches follow-up inquiry
• Netherlands: Tightening the supervision of the accountancy profession

Coronavirus crisis: Implications on reporting and auditing

The coronavirus (SARS-Cov-19) pandemic continues to spread in many countries, including in Europe. This crisis also has significant economic effects on companies, for example due to restrictions in production, trade and consumption or due to travel bans.

These economic effects have an impact on accounting, reporting and auditing financial statements of the companies or groups concerned. We highlight some of these potential implications in our publication ‘Coronavirus crisis: Implications on reporting and auditing’. However, the impact on companies will differ and companies, and their auditors have to consider how it affects their business and review them regularly. The further development, duration and impact of the coronavirus cannot be predicted. In any case, accountants and auditors should remind companies of the various national initiatives for relief to companies.

We explore coronavirus’ effects on:

• Accounting and reporting for companies as of 31 December 2019
• Accounting and reporting for companies with year-ends in 2020
• Auditing financial statements on 31 December 2019 and beyond
• Practical matters for the audit of financial statements

Read more

We have also collected relevant coronavirus resources for European accountants and we keep adding new ones to the list. Read more

Our latest addition are resources for financial institutions, mainly covering the impact of the coronavirus outbreak on financial reporting (including IFRS 9 Financial Instruments) and regulatory reporting, and the related audit considerations. Read more

In the meantime, we continue working on further material on the implications for reporting and audit and aim to make this available on our website shortly.

CEAOB on the impact of Covid-19 on audits of financial statements

The Committee of European Auditing Oversight Bodies (CEAOB) published a statement highlighting the following areas that are of high importance for the performance of ongoing audits:

• Obtaining of sufficient appropriate audit evidence
• Going concern
• Subsequent events
• Reporting and Communication

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IAASB guidance for auditors during the coronavirus pandemic

The International Auditing and Assurance Standards Board (IAASB) issued a guidance for auditors highlighting areas of focus in an evolving audit environment due to the impact of covid-19.

The guidance lists the relevant International Standards for Auditing (ISAs) and specific matters for each of these which auditors have to consider in the context of the pandemic.

In addition to this, the IAASB is working on four more staff alerts on specific areas of focus.

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IAASB Consults on Extended External Reporting Assurance

The IAASB issued a draft non-authoritative guidance on Extended External Reporting (EER). It covers various aspects of the performance of an EER assurance engagement where practitioners commonly encounter challenges in applying ISAE 3000 (Revised): Assurance Engagements Other than Audits or Reviews of Historical Financial Information. IAASB is requesting public input by 13 July 2020.

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IAASB revised its standard for performing Agreed-Upon Procedures (AUP) engagements

The IAASB released International Standard on Related Services (ISRS) 4400 (Revised). The Standard will be effective for AUP engagements for which the terms of engagement are agreed on or after January 1, 2022.

The IAASB also released an ISRS 4400 (Revised) Fact Sheet to provide implementation support in relation to the more significant changes to the Standard.

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UK: Business Committee launches follow-up inquiry

The Business, Energy and Industrial Strategy (BEIS) Committee has launched an inquiry on delivering an audit reform. It aims to help find a way to implement a meaningful reform of the UK’s audit industry following the inquiries from the BEIS Committee, CMA, Sir Donald Brydon and Sir John Kingman.

In the newest inquiry, the BEIS Committee plans to gather oral evidence later this year based on stakeholders’ responses to the previous reviews and examine how they can fit together to deliver the reform to the UK’s audit industry. Read more

Netherlands: Tightening the supervision of the accountancy profession

The Dutch cabinet announced that they were taking measures to improve the quality of audits. Read more (in Dutch)

The supervision of the accountancy profession in the Netherlands will be strengthened. Minister of Finance, Hoekstra, has accepted most recommendations from the Committee on the Future of the Accountancy Sector (CTA). The cabinet announced, for example, that:

• All supervision goes to the supervisory authority AFM
• More firms will get external supervisory directors, and they will have more say
• Auditors must show for themselves how well they actually do their work, based on new, fixed criteria for quality
• Alternative models such as audit only, joint audit and also financial walls between audit and advice are still on the table
• Test with independent assignment of auditors will be launched

Read more (in Dutch)