The novel corona virus has posed significant challenges in the way auditors are going to carry out their audits not only for the December year ends but for subsequent audits should the pandemic last longer.

The biggest challenge yet has been the limitation that the pandemic has posed on the auditor’s ability to conduct their field work. Gaining access to evidence that they require to support their audit opinion has proved to be difficult as face to face meetings which make it easy to acquire the information with ease from clients has become problematic with the social distancing and the government mandated curfew becoming the new norm. As a result, many have been forced to work from home and to adjust their working hours.

Additionally, in upcoming reporting periods, even as companies conduct risk assessments of the impact of the pandemic, auditors are likely to find that assessing clients accounting estimates is going to be more complicated than usual. Activities such as production and distribution which have been affected will pose a significant challenge not to mention the inventory and bad debts accounts.

Nonetheless, despite the challenges, the delivery of high quality audits should not be undermined.

While we understand how complex and challenging the situation has especially with our teams being forced to work from home, we are very much committed to maintain high quality standards in the delivery of the audit reports and we endeavor to work with each individual client to get the audits completed,’’ Daniel Muhia, Audit Partner MGK.

As such, in order to achieve successful audits during this period, auditors should observe the following:

Adapt the use of technology in carrying out audits

There is an increasing need to change the audit approach such as conducting fieldworks and develop alternative methods of obtaining the information needed to provide a comprehensive audit.

As such, the use of technology in sharing data and hosting virtual meetings to obtain information from clients is the way to go. At MGK, we have already adapted this and we do encourage our clients to do the same to ensure a seamless audit process is achieved.

Liaise with clients on changes in the reporting timetables

The change in business operations mentioned above such as working remotely or the partial lockdown can affect the reporting timetables for the December year ends audits. It is therefore important for auditors to liaise with the clients regarding any changes in the reporting deadlines and its potential impact on the the audit process and find ways to navigate through any inconveniences.

December Year End Audits to be treated as non-adjusting event

The corona virus was not in the country until March 2020 and therefore there are no preexisting conditions due to the pandemic that existed as at 31st December 2019.Therefore the pandemic does not affect the balance sheets for this period unless there are client companies whose operations had close trading associations with companies in China. The impact of the virus will however be experienced in subsequent reporting periods.

According to the International Accounting Standard (IAS) 10, an adjusting event is one that ‘provides evidence of conditions that existed at the end of the reporting period’.

Develop a proactive approach

It is important for auditors in this period and subsequent reporting period to discuss with their clients on possible outcomes of the corona virus on the company, its operations and respective contingency plans.

Bringing it all together, we maintain open lines of communication to all of our clients. Our offices remain fully operational and we shall continue to deliver quality standards of work to all our clients.

For more information, please contact;

Daniel Muhia

Audit Partner  

t +254 715 248882 | +254 733 533449


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