- Disruption and uncertainty caused by COVID-19 will continue to present challenges for financial reporting and auditing
- Confidence and trust in our profession is more important than ever
- Pre-COVID themes, including audit quality, SMEs, sustainability reporting, and reform to financial reporting, are coming back on the agenda
The global pandemic forced all of us to think differently, learn on the fly and adapt to a new normal in 2020. Chartered Accountants in financial reporting and auditing roles have hardly skipped a beat, delivering with the integrity and confidence stakeholders and markets demand despite the most challenging and fast-changing circumstances in living memory.
But the pandemic continues to create uncertainty and many of the developments that went on ice in 2020 are coming back onto the agenda.
With so much happening, we have set out some of the main themes in two instalments – starting with the continued impacts of the pandemic and audit debate; and watch for an overview on SMEs, sustainability reporting and the big developments in financial reporting standards.
COVID-19 and a new normal
We are in a new normal with vaccinations being roll out, outbreaks continuing and uncertainty. Last year taught us auditing and financial reporting can be done remotely, and that financial statements disclosure is key to dealing with uncertainties prevalent across our capital markets.
Uncertainty will continue to impact going concern, impairments and asset valuations, and other issues, such as post balance date events, leases and rent concessions, may also arise.
CA ANZ will continue to focus on connecting and advocating with governments and regulators to ensure they are across these challenges, providing forums, tools, and resources for Chartered Accountants to discuss and navigate the challenges. The CA ANZ resources, including the auditing and reporting guide and COVID-19 Resource Hub, will help members and businesses navigate change and rise to the challenges of COVID-19 in 2021.
High bar for audit quality
Although inquiries and reviews slowed down in 2020, including in the UK and Australia, audit reform is now coming back onto the agenda.
The Parliamentary Joint Committee on Corporations and Financial Services issued its final report on its inquiry into the regulation of auditing in Australia, reaffirming the interim recommendations, including on internal controls reporting and auditing, independence including audit firm tenure and non-audit services, and digital reporting. The recommendations are largely consistent with CA ANZ’s Comprehensive plan that was submitted to the inquiry.
In 2021, the Government, regulators and standard setters are working on responding to the final report. CA ANZ will focus on advocating for a balanced approach to implementation with realistic transition, and in particular potential impacts on SMEs and different sectors. Check out for more information here.
CA ANZ has led the conversation with the New Zealand profession and investment and business community over the past two years, aimed at responding to the international debate, local needs in New Zealand and getting ahead of any external pressures for review or inquiry as has taken place in so many other jurisdictions.
These discussions turned to a proactive plan for the audit profession in New Zealand in a late 2020 CA ANZ roundtable, including how to make audits more relevant to investors and users. We expect to publish a summary of proactive policies that have emerged from these conversations in 2021.
CA ANZ’s latest Investor Confidence Survey shows COVID-19 has led to investors taking more notice of audited financial statements as these have become one of the last solid, reliable sources of information on what is actually going on in businesses, among a flurry of commentary and speculation.
Despite the pandemic shaking the confidence of retail investors in the economy and elsewhere, investors’ confidence in financial reporting by public companies and independent auditors has remained steady.
Recently revised auditing standards on risk assessment and auditing estimates along with the International Auditing and Assurance Standards Board’s (IAASB) new quality management standards will call for a focus from practitioners in 2021.
The IAASB also conducted research on the role of the auditor in relation to fraud and going concern in an audit of financial statements and whether the auditing standards on these topics remain fit for purpose. CA ANZ will support the members to navigate through new standards and reforms.
Check out our website on audit and assurance, and reporting, including the fortnightly Reporting and Assurance News for more.
The auditing and reporting guide
Highlighting some of the biggest COVID-19 impacts on reporting and assurance, this guide provides practical guidance and points to useful resources to help you work through these impacts. Whether you are a preparer, director or auditor, much has changed and this guide is here to help.Read more
Clear themes emerge for audit plan for NZ
Senior representatives from audit firms, the NZ Shareholders Association, the Institute of Directors, the Office of the Auditor-General, internal auditors, regulators and standard setters and CA ANZ discuss a proactive plan for the future of New Zealand audit.Read more