COVID-19: Council orders external auditors to adopt alternative procedures

The Financial Reporting Council (FRC) has issued a directive to external auditors to embrace procedures other than the normal ones in obtaining audit proofs so as to curb the effects of the coronavirus outbreak on the audit process.

In its Guidance for External Auditors and Matters to Consider during COVID-19 period, the FRC observed that, to document and review engagements, more time might be needed because of a number of actions taken by the federal and the state governments in conjunction with Ministries, Departments and Agencies (MDA) to curtail the impact of the coronavirus.

It also enjoined external auditors to adopt flexibility in executing their duties.

The FRC, in its highlights of the guidance, said “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).

Read also: COVID-19: 82% of Nigerian companies may record poorer revenue –ACCA

“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 FRC recommended alternate measures like work-from-home option, use of video/teleconferencing as well as electronic evidence for auditing practitioners.

“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,” the FRC said.

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