As the world comes to terms with the deep-seated impact of the COVID-19 pandemic, auditing firms in India are facing unprecedented challenges. Social distancing has resulted in various constraints for auditors that impede traditional audit processes. Auditing firms are seen coping with the new scenario by demonstrating immense organisational agility.
Challenges faced by auditing firms as a consequence of COVID-19
- Access to client location
Given the norm of social distancing, auditors can no longer be physically present at the client’s place of business to conduct the audit. Therefore, auditors will have to adopt newer technologies to ensure reasonable assurance that there is no material misstatement. Also certain critical audit processes such as Physical Stock Counts, FA Verification will have to be conducted online.
- Client’s access to technology
Auditors deal with a wide range of business clients who may or may not use technology in their financial operations. In these times of COVID-19 when remote auditing is the norm, it is challenging to work with clients with little or no digital financial records.
- Impairment reporting
As businesses shut shop for long durations in the lockdown period, auditors come across numerous assets that have suffered impairment losses. Auditors need to apply professional skepticism to judge and value such impairment losses. However, auditors encounter a reluctance from client side to accept and account for impairment losses – this is because of the massive stress that such losses put on the financials of a business.
The new approach for auditing firms
The latest ICAI advisory on auditing in times of COVID 19 has emphasised on the use of technology to maintain high standards of audit processes and accuracy of records. Auditors across the country are chalking out new action approaches in these pandemic circumstances. Here are a few significant changes in auditing processes seen this year:
- Adoption of cloud technology
A lot of auditing firms have moved data analysis and verification on cloud to enable their teams to share the requisite data with clients and vice versa. Use of apps like Google sheets and Zoho facilitates real time updating and sharing of data.
- Onboarding advanced auditing software
A lot of auditing firms are onboarding advanced auditing software(s). Even though, this calls for long term investment and training costs, most auditors would recommend it today. Digitisation of auditing processes greatly enhances efficiency and enables coordination in a remote work environment.
- Online Consultation
One of the prime services of an auditing firm to their client is that of financial consultation. Auditors are now offering consultation through digital means like audio or video conferencing in keeping with social distancing norms.
- Audit Evidence
Auditors are opting for newer methods for documenting audit evidence like zoom vide recording for Stock Verification, scanned documents and digital signature shall become norm for compiling Audit Evidence.
CONCLUSION
COVID-19 has brought about a significant change in traditional auditing practices and auditing firms are seen rising to the challenge. Our prime focus is to maintain a high quality of auditing while ensuring the health and safety of all our employees and clients. And for all we know, the pandemic may have accelerated the digital transformation of the auditing industry worldwide and this could be the start of a new chapter.
