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The Auditor’s Report Tests Positive for Covid-19


Caroline Cherry

Abstract

Purpose/objectives: The objectives of this article are to obtain an understanding of difficulties encountered by auditors during the Covid-19 pandemic and to determine how they addressed these difficulties. This is to add to and verify the accuracy of the existing body of literature that speculates on the possible effects of the pandemic on external auditors.
Design/methodology/approach: Literature from several professional bodies, practitioners and academics is examined. The effects of Covid-19 on audits are explored through examining auditors’ reports, including the Key Audit Matters (KAMs) raised by auditors during audits conducted since the start of the pandemic.
Findings: A selection of audit reports of companies listed on the Johannesburg Stock Exchange (JSE) reveals how Covid-19 plagued the audits of 2020. The audit reports themselves confirm these concerns and reveal that Covid-19 is not only linked to a significant number of key audit matters but could also be significantly associated with the type of key audit matter raised.
Practical implications: This article aims to bridge the gap between speculations on the effects of Covid-19 on financial external audits and the actual effects of Covid-19. This provides insight into what the real challenges faced by auditors were during the pandemic and how significant they were to conduct an effective audit over this period. Through this, understanding future audits in stressed environments, such as pandemics, can be better managed.
Originality/value: To the author’s knowledge, no such research examining the actual effects of Covid-19 on external financial audits have yet been conducted and this research, therefore, adds to the current body of academic research by enhancing the value of audit reporting and adding credibility to the current speculative literature around the perceived effects of Covid-19 on audits.


Journal Identifiers


eISSN: 1998-8125
print ISSN: 1561-896X