There’s no question that the COVID-19 pandemic has drastically impacted the day-to-day operations of most organizations. While management may have had contingency plans in place, few could have imagined the need to implement these procedures seemingly overnight. As provinces and municipalities enact shutdowns of non-essential organizations, many organizations are adjusting to working remotely with their audit teams to finalize year-end financial statements and other financial reporting requirements.
Remote audits not only keep people safe, but they also enhance flexibility, and minimize disruptions to business operations. If your organization has an upcoming audit, here are 10 tips to prepare for a seamless remote experience.
1. Have a plan.
Have a plan for inventory counts in case your auditors are unable to physically attend due to restrictions or safety precautions. Inventory planning includes:
- Having a discussion with your auditors in advance on your organization’s processes, controls, and instructions.
- Testing your remote technology in advance (including webcams, virtual meeting tools, etc.) to troubleshoot potential issues as well as minimize delays and disruptions during the inventory count.
- Ensuring both your on-site personnel and audit staff have each others’ direct contact information to allow for quick communication if technology issues arise during the count.
2. Test document sharing tools.
Test and understand the functionality of all document sharing tools, including secure websites/portals to minimize the use of email while sharing documents, which may be less secure. Ensure your staff receives training on the use of the data sharing technology, as necessary, and can access it. This may require your IT team to allow for access to the website or portal used for all employees requiring access.
3. Consistent naming conventions.
Develop consistent naming conventions or folders for sharing data securely to allow for ease of auditor review and tracking of outstanding requests. Scanning multiple documents into one file may seem quicker at the outset but it can lead to multiple follow-up requests as your auditors work through to determine what files relate to which audit requests.
4. Kick-off meeting.
Hold a kick-off meeting (via phone or video conference) with your audit manager and partner to understand their plan to oversee the remote audit team and ensure the audit remains on schedule and issues are communicated in a timely manner. Consider weekly calls with key audit stakeholders (e.g., CFO, controller, senior accountant, audit partner, audit manager) to ensure issues are resolved in a timely manner and that all parties understand the audit timeline and status.
Keep open communication with your auditors, including developing appropriate communication protocols with respect to audit inquiries. Setting aside time daily with your auditors to talk through questions will allow for more efficient responses and closing out of open items, versus back and forth emails which may become burdensome and lead to missed questions and requests.
6. Flexibility is key.
Embrace flexible schedules to work together with your auditors, as the pandemic has created shifts in daily responsibilities with many people working from home. Traditional office hours may no longer apply. Be open and flexible to calls at different times of the day to ensure the flow of information to-and-from your audit team remains constant.
7. Detailed lists of requests.
Request that your auditors maintain a detailed list of outstanding audit requests and shares and updates the list frequently throughout the engagement. A detailed outstanding list will minimize surprises throughout the audit, especially as it nears completion, and will allow both the auditors and management to remain responsible to each other.
8. Preliminary impact discussions.
Have a preliminary discussion with your auditors early in the audit process to analyze any significant impacts to your business due to changing market conditions, including valuations and discount rates, the organization’s ability to continue as a going concern or other subjective estimates that may have fluctuated greatly due to pandemic uncertainty.
9. Transparency. Transparency. Transparency.
Be transparent with your auditors. The COVID-19 pandemic may have resulted in changes to the processing of transactions and internal controls that are relevant to the audit. As a result, revisions to the audit plan and procedures may be necessary to ensure sufficient appropriate audit evidence is obtained. Timely updates to system narratives are essential to ensure that the engagement is appropriately planned and executed.
10. Government relief measures.
If your business took advantage of government pandemic support programs or received/provided lease concessions with your landlord/tenant, ensure the accounting for those relief measures are understood and discussed with your auditors in advance. The Accounting Standards Board has issued amendments to organization’s applying Canadian accounting standards for private enterprises (ASPE) and Canadian accounting standards for not-for-profit organizations (ASNPO) that provide optional relief for accounting for lease modifications which may be applicable.
Specific professional advice should be obtained prior to the implementation of any suggestion contained in this article. Contact your Crowe Soberman advisor for more information.