The audit environment has essentially changed overnight. Today, we are encouraged or required to work from home, and travel and in-person meetings are discouraged or forbidden. At the same time, the requirements to complete the annual audit, issue financial statements and other financial and regulatory reports remain. However, the positive news is that past the month has proven that we can adapt to these unforeseen changes by leveraging technology to continue to effectively conduct financial and compliance audits, ensuring reporting deadlines are met.
The following considerations will help complete a successful, remote audit as well as prepare for next year’s audit.
- Communication – Ongoing communication is critical. We recommend starting each project with a kick-off call to discuss responsibilities, schedules and communication protocols. In addition, regularly scheduled status calls are helpful to clarify open items and timelines.
- Video calls – Similarly, video calls can be used for entrance and exit conferences, individual interviews and even report presentations.
- Secure collaboration software – File sharing applications, such as Huddle, can be used to securely transfer data between staff and the audit team and also allow for organization of files by topic, responsible party, date, etc.
- Providing auditors remote access – Determine who will need access to certain systems or information. In many cases, remote access can be provided directly to the auditor while in other situations government staff will need access to run reports. If there is information maintained in paper only format or systems that can’t be accessed remotely, discuss the availability of an individual to access that information and any special timing restrictions.
- Web-based meeting tools – Online meeting tools can be used to share screens to observe reports being run, discuss detailed questions or conduct inventory or facility inspections. Prior to relying on these tools, individuals should test the access and functionality.
- COVID-19 variances – When preparing current period financial information for internal use and reporting, note any increases or decreases that appear to be COVID-19-related. This information will be valuable for next year’s audit in explaining variances. For those applying for grant funding as discussed in another Baker Tilly article, this exercise may also be beneficial for that purpose.
- Internal control environment – While your office staff is working remotely, you may need to alter standard processes. If alternative controls or mitigating controls are put in place, document those now as that information will be discussed as part of next year’s audit.
- Subsequent events – Prior to finalizing the financial statements, management should consider if there is impact from COVID-19 based on currently known facts that are essential to a user’s understanding of the financial statements. If so, a subsequent event disclosure should be included in the financial statements. If unknown, the management team may want to discuss and analyze potential impact.
For more information on this topic, or to learn how Baker Tilly public sector specialists can help, contact our team.