While we pass through the second phase of lock down, as an
auditor, it only makes our life more difficult. Considering the impact of COVID
19 on client’s businesses, forming an opinion based on testing performed on estimates
and forecast, makes us re-visit our conclusions.
In such scenario, non-disclosure of a caveat on COVID 19 in the
Auditors Report further tests the auditor’s scepticism. I have been collating my
ideas together and have concluded to disclose a paragraph in the Going Concern section
of the Auditors report.
I would be adopting it for all my audit clients, who may have
significant impact on their business. If you share my views, feel free to adopt
it in your Auditors Report.
Uncertainty due to COVID 19 Pandemic
COVID 19 Pandemic has created uncertainty not only for the
companies in UK but also worldwide. Audit process assesses and challenges the reasonableness
of estimates made by the directors, relevant disclosures and adoption of the
going concern basis in preparation of the financial statements. Such estimates depend not only on future prospects and performance of the company but also
on the economic environment in which the business operates.
At the date of this report, the unprecedented level of
uncertainty and outcome arising from COVID 19 Pandemic is unknown. Our audit
should neither be expected to predict the uncertainty revolving round the
pandemic nor the precise future economic impact on the operations of the company.
Caveat
Opinions expressed are those of Mr.
Devendraprasad Kankonkar (Deva) as an individual and are his interpretations of
the standards. It has no direct or indirect link with views expressed by
regulators, such as ICAI/ICAEW, of which he is a member. This material is for
general information and does not constitute investment, tax, legal or other
form of advice. You should not rely on this information to make (or refrain
from making) any decisions. Always obtain independent, professional advice for
yourself as the advice may change based on your circumstances. Resemblance to
information on any other site or blog would be just a co-incidence and
unintentional.