The Financial Reporting Council of Nigeria says it has assessed the impact of COVID-19 on audit of reporting entities in Nigeria.
It had also released guidelines for external auditors and matters to consider during COVID-19 in order to maintain high-quality audit in Nigeria after consultation with key stakeholders.
It stated, “Given the severity of the COVID-19 pandemic and its consequential impact on employees, mobility, the financial systems and the economy, it is very likely that auditors may encounter scope limitations or complex auditing and accounting issues which may require audit teams to consider modifications to audit opinions.
“Audit firms’ quality leaders/engagement partners are encouraged to reach out to the council if there are any matters, they would require the support or clarification of the council.”
It stated that the council, which aligned with all the measures by the federal and state governments as well as relevant agencies in containing the COVID-19, was concerned about the financial health of corporate entities as usually reported in financial statements especially during this difficult period.
The FRC said it noted that additional time might be required to document, review audit engagements due to some measures taken by federal and state governments in collaboration with their ministries, departments and agencies to contain the scourge of COVID-19.
It stated that the measures involved travel ban, quarantines, social distancing, and closure of non-essential services.
Undoubtedly, it added, these measures had triggered significant disruptions to businesses worldwide, resulting in an economic slowdown and other economic challenges.
FRC classified the situation into three major audit categories.
They were audit of 2019 financial statements, which had been completed; audit opinion issued and report already released to shareholders, no impact of COVID-19; only accounting issues in first-quarter reports and onwards.
The second category, it explained, was audit of 2019 financial statements that were still ongoing with respect to reporting periods ended on or before December 31, 2019.
It said auditors were required to consider the adequacy of disclosures included in the financial statements as companies were required to disclose each material category of non-adjusting events after their reporting period.
It stated that the third was audit of 2020 financial statements (Accounting periods ending on or after January 1, 2020).