the institute of chartered accountants of india the … · 2020-05-15 · •use of technology...
TRANSCRIPT
Chintan N. PatelCA, CPA(USA), CISA(USA), CS, DISA, DIRM
15th May, 2020
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
The Committee for Members in Practice (CMP), ICAI
Organises
Going Concern assessment
Physical verification of Inventory
Inventory Valuation
Impairment of Non-financial assets
Financial Instruments
Other important considerations
During the Audit
Audit Report
Link to related ICAI resources
CA. Chintan Patel - Audit during Covid-19
Review of management’s consideration of Going concern assessment
• Regulatory / Operating environment / Liquidity considerations
• Mitigating factors
• Management information and forecasting capabilities
Period of assessment
Audit Report
• Key Audit Matter (KAM)
• Material Uncertainty exists
• Separate Section in audit report: Material Uncertainty Related to Going Concern
• Disclosure by management adequate : Unmodified Opinion, otherwise Qualified/Adverse opinion
• Disclosure by management – adequate?
CA. Chintan Patel - Audit during Covid-19
Management unable to Conduct Physical Inventory counting
Physical counting on later date from date of FS
Impracticable for auditor to attend physical inventory counting
• Using work of internal auditor
• Engaging other Chartered Accountant
• Use of technology
Inventory held by third party
Inventory in transit/ cut off process
CA. Chintan Patel - Audit during Covid-19
CA. Chintan Patel - Audit during Covid-19
Relevant Material/Guidance SA 500 Audit Evidence SA 501 Audit Evidence - Specific Considerations for Selected Items
CARO 2016
Audit Report▪ Clean / Modified
Impracticable as explained in paragraph A12 of SA 501:In some cases, attendance at physical inventory counting may be impracticable. This may be due tofactors such as the nature and location of the inventory, for example, where inventory is held in alocation that may pose threats to the safety of the auditor. The matter of general inconvenience tothe auditor, however, is not sufficient to support a decision by the auditor that attendance isimpracticable. Further, as explained in SA 200, the matter of difficulty, time, or cost involved is not initself a valid basis for the auditor to omit an audit procedure for which there is no alternative or to besatisfied with audit evidence that is less than persuasive
Whether physical verification of inventory has been conducted at reasonable intervals by themanagement and whether any material discrepancies were noticed and if so, whether they have beenproperly dealt with in the books of account
• Lower of Cost or Net Realisable Value
• Allocation of fixed overheadsInventory valuation
• Indicators of impairment
• Cash flow projectionsImpairment of Non-
financial assets
CA. Chintan Patel - Audit during Covid-19
• Expected Credit Loss (ECL)
• Probability of Default
• Loss Given Default
• Exposure of Default
• Trade Receivables
Impairment of Financial Assets
Measurement of Investment and other financial assets at fair value
Hedge Accounting
CA. Chintan Patel - Audit during Covid-19
RevenueExternal
Confirmations
Cut off procedures
Subsequent Events
CA. Chintan Patel - Audit during Covid-19
Safety, Precautions to be taken while carrying out audit
Use of Technology
Materiality and revision during the process
CA. Chintan Patel - Audit during Covid-19
Evaluation of Management’s
expert
Management Representation
Letter
Consideration of Internal
Control
CA. Chintan Patel - Audit during Covid-19
Reporting on Key Audit Matters
CARO
• Modified opinion – Illustrative situations
Auditor’s Opinion
• To read other information and consider whether consistent
• Risk Assessment
• MD&A
• Notes to financial statements
Responsibility relating to Other Information
CA. Chintan Patel - Audit during Covid-19
Unable to obtain sufficient appropriate audit evidence relating to material component audited by the other auditor
Not accounted or reported or disclosed Financial impact arising out of the COVID-19 outbreak as per applicable AS
Unable to obtain sufficient appropriate audit evidence and of opinion of material misstatement
Refusal by TCWG to correct material misstatements communicated by the auditor
CA. Chintan Patel - Audit during Covid-19
Physical Inventory Verification~ key audit considerations amid Covid-19
Going Concern~ key considerations for auditors amid Covid-19
FAQs on Indian Accounting Standards(Ind AS) under Covid-19
Impact of Financial Reporting and the Auditors Consideration
Addendum: Additional guidance in relation to impairment loss for financial
instruments under ECL
• https://resource.cdn.icai.org/59498aasb48418.pdf
• https://resource.cdn.icai.org/59473aasb48392.pdf
• https://resource.cdn.icai.org/59470asb48382.pdf
• https://resource.cdn.icai.org/58829icai47941.pdf
• https://resource.cdn.icai.org/58993icaiasb110420.pdf
CA. Chintan Patel - Audit during Covid-19
