Remote Auditing

AUDITING IN A COVID-19 ENVIRONMENT The Only Constant is Change By daniel BrinGhurSt, Cpa

At Larson & Company, one of our core values is “Deep change is constant. Deep change comes from changing ourselves, not others.” While this statement rings true for me, 2020 has solidified the importance of this value more than ever. It has been a year which has challenged the status quo of the accounting profession, allowed for growth and improvisation, and served as a preview into the future of the profession. These challenges have impacted nearly every industry, and public accounting has been no exception. Remote Auditing The concept of remote auditing has been practiced by some auditors and auditees in various industries for a while but has been forced into large-scale adoption due to the ongoing pandemic. With travel restrictions, public health mandates, and other local government responses, the traditional face-to-face audit of the past is no longer possible for most organizations. These limitations initially led to the question of whether a fully remote audit would be permitted under the professional standards. The quick answer to this question is yes, if all parties have the necessary technology infrastructure in place. Auditors must continue to be mindful of the relevant auditing guidance, ensuring that they are obtaining sufficient appropriate audit evidence through a remote auditing environment. Changes to Auditor Tools COVID-19 has drastically changed the status quo for auditors and the way they are accustomed to operating. Historically, working in an auditing department at a public accounting firm has included things like working around a conference table, whiteboard discussions, banter with co-workers about sports and other topics, and having the ability to interact with clients face- to-face on a daily basis. One of the primary tools used to replace these things is video conferencing through services such as Zoom, Microsoft Teams, and GoToMeeting. While these services cannot entirely replace the value of face-to-face interaction, they have been a valuable tool for auditors and other professions during this pandemic. During the pandemic, we have all likely heard screaming children, dogs barking, and other embarrassing things you might not ordinarily see from a standard conference room setting. Personally, I have enjoyed getting to work and collaborate with colleagues in a more personal setting than what we are used to in the profession. Having this opportunity to learn more about a colleague’s hobbies, family, remote schooling challenges, etc. in a home setting has increased a sense of teamwork and contributed to positive camaraderie with fellow co-workers during these difficult times. Impact on Teams One of the unforeseen challenges that auditors have

seen due to COVID-19 is the impact on their teams. More specifically, the impact that a lack of face-to-face interaction has had on teams. It is easy to take for granted the value of seeing your colleagues each day, engaging in water cooler discussions, and helping each other during difficult days. What can be done to overcome this? I believe a good place to start is taking the initiative to stay involved in the lives of your coworkers. Previously this might have been stopping by their desk to say hello. Now, this will more likely involve a phone call or Zoom call, or simply sending a message to check in and see how they are doing.

Maintaining Productivity During the early days of the pandemic, one of the challenges that was commonly expected was how to make sure our teams are staying productive? Now that we are several months into the pandemic, the results observed have been mostly successful in both public accounting and other industries as well. This success has led many business owners to consider adopting large-scale remote working environments as a part of their post-pandemic operations. One popular concept used to maintain productivity for remote employees is Scrum. The framework of Scrum was initially used in the software development industry but can be utilized in any industry that focuses on project management. This methodology includes the following five primary events: sprint, sprint planning, daily Scrum meeting, sprint review, and sprint retrospective. One aspect that is particularly helpful for remote teams is the daily Scrum meeting. These are short 15-minute meetings where each member of the team reports on what they did yesterday, what they plan to do today, and any obstacles they need assistance with. The concept is simple but can be very effective in making sure teams are maintaining productivity, are accountable for their responsibilities, and are resolving challenges in a timely manner. Evolving Risk Environment Through the course of the pandemic, businesses in nearly every industry has had to adapt and find ways to continue operations successfully. Management at these companies has had to change longstanding processes, perhaps more than once, to continue operations as their employees ReMote AuditinG and customers change physical locations. All this change equates to modifications in the risk assessment, both internally and for the auditors. Auditors will now need to gain a greater understanding of how internal controls were operating pre-pandemic and during each phase of the pandemic. While solving operational issues will certainly take immediate priority, it remains critical for management and other stakeholders to identify and mitigate the new stresses this may put on the risk assessment of their organization.

Technical Audit Impacts Continuing operations successfully has likely been the highest priority task at your organization, and rightfully so, as fighting to stay in business has been top of mind for all of us. However, eventually there will also be reporting considerations to think through when it comes time to issue the financial statements. Some of these considerations include going concern, subsequent events, risks and uncertainties, accounting for debt forgiveness or other government assistance, and the potential for scope limitations. Most of these conversations are typically rather unenjoyable, however, they are inevitable and required to be considered by management and the auditor. If you have not done so already, best practice would be to start these discussions now to avoid any surprises down the road.

Many of us are still adjusting to the lasting effects of COVID-19. With all the negative changes from the upheaval of 2020, there are still several positive changes to remember. Learning to be more agile as a company and adapting to a rapidly changing environment are vital skills for businesses to move forward. Deep change is constant, and hopefully we will all feel more prepared to face it in the future. n

Daniel Bringhurst, CPA, is an audit senior manager with Larson & Company, PC. He has more than seven years of experience in public accounting. He graduated from the University of Utah in 2014. Daniel enjoys golfing and spending time with his wife and children.