Covid-19 guidance updates
The International Auditing and Assurance Standards Board (IAASB) has released Covid-19 pandemic-related guidance for auditors. The guidance (which can be found here) is particularly useful for determining when to use an emphasis of matter paragraph in the auditor’s report.
The Irish Auditing and Accounting Supervisory Authority (IAASA) has created a Covid-19 hub on its website where relevant publications from various bodies have been brought together.
The Registrar of Companies has decided to extend the existing arrangement for filing deadlines until 31 October 2020. All annual returns due to be filed by any company between 18 March and 31 October 2020 will be deemed to have been filed on time if filed by 31 October 2020. The Registrar of Friendly Societies has granted an even lengthier filing extension, to 31 December 2020.
New guidance on the audit of estimates has been published by IAASB (you can find it on IFAC's website). This area of auditing has become more difficult due to the uncertainty arising because of Covid-19.
The International Federation of Accountants (IFAC) has produced a comprehensive survival checklist of things a small business needs to do to restart after the pandemic. Many practices have found the list useful when preparing business restart plans and especially the LEO (Local Enterprise Office) grant-aided restart plans. Read the checklist.
The Office of the Director of Corporate Enforcement (ODCE) has issued a statement on Covid-19. The statement sets out the ODCE position on potential restriction or disqualification for directors arising from business failure caused by trading difficulties related to Covid-19.
The UK’s Financial Reporting Council (FRC) has issued guidance discouraging businesses from disclosing ‘normalised profits’ that exclude the estimated effect of the Covid-19 crisis. The FRC considers such calculations likely to be highly subjective and therefore potentially unreliable.
The FRC has produced several guidance documents for auditors and accountants to consider where engagements are affected by Covid-19. While the FRC focus is on the UK rather than Ireland, most issues are common across both jurisdictions:
- Covid-19 Bulletin March 2020 for auditors, updated to April to include gathering of evidence through remote means
- coronavirus risk disclosures for companies – read the guidance
- modified (qualified) audit reports arising from Covid-19 – read the guidance
- guidance for companies on corporate governance and reporting (including interim reports) – find it on the FRC website
- for learning on the go, there is a podcast discussion on the new guidance – available on the FRC website.
The UK’s Department for Business, Energy and Industrial Strategy has also published guidance on virtual AGMs – you can find it on the FRC website. Similar legislation has since been passed in Ireland and is available on the eISB website.
The EU’s Committee of European Auditing Oversight Bodies (CEAOB) has issued guidance on areas that are of high importance in view of the Covid-19 impact on audits of financial statements. The guidance includes discussion on obtaining sufficient evidence, going concern and subsequent events.
Accountancy Europe has produced a factsheet on the coronavirus impact on ongoing audits. The factsheet looks at the identification and assessment of risk, the response to that risk, auditor reporting and the auditor’s involvement related to government supports. Accountancy Europe has also produced a factsheet on the coronavirus impact on auditing for 2019 year-ends and beyond.
The European Banking Authority has clarified aspects of the functioning of the prudential framework for the EU banking sector so it can handle in a consistent manner matters related to the classification of loans in default, the identification of forborne exposures and the accounting treatment. You can find the clarification here.
ACCA also continues to keep its Covid Hub updated.
Going concern
The FRC has reviewed the going concern policies and procedures of the seven largest UK audit firms in accordance with the ISA (UK) 570 standard. The review found that the additional policies and procedures introduced since Covid-19 were appropriate and reasonably consistent across the firms.
Wage subsidy
Revenue has commenced a compliance programme for all employers using the wage subsidy scheme. Tranches of letters will be issued to employers seeking confirmation of compliance with the scheme rules, including that:
- participating employers meet the eligibility criteria
- employees are receiving the correct amount of subsidy
- the subsidy amount is being correctly identified in employee payslips.
Members who have received the enquiry letter estimate that it will take two to three hours of work for smaller companies to prepare the information sought, but longer for larger companies or companies that used a non-standard method of determining they had met the 25% reduction criterion in the basis period.
