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The impact of Brexit and COVID-19 on audits

It is now more than a year on from the start of the pandemic and several months since the Brexit transition period ended. 

These events have had a significant impact on businesses of all sizes, including audited and unaudited firms. 

One of the roles of an audit is to monitor financial risks within a company and provide an indication of its future potential as a going concern. 

Given the events of the last year, this task has become increasingly difficult, especially considering that many businesses are yet to reach their full potential due to the ongoing restrictions that they face and have seen their overall value and assets affected. 

For those businesses that are required to undertake regular audits by law, the current period is less than ideal, but it remains a mandatory requirement. 

To help auditors take the impact of Brexit and COVID-19 into account, the Institute of Chartered Accountants in England and Wales has produced a practical checklist for audit firms that suggests ten questions to help auditors develop a consistent approach to the impact of Brexit.

This checklist is designed to challenge auditors, such as the team at Seymour Taylor, to dig deeper into issues affected by Brexit, as well as COVID-19 to ensure that businesses continue to receive accurate reports of their current financial health following an audit. 

Similarly, the IFRS Foundation has published a document to help auditors and accountants through the intricacies of applying going concern requirements during the current volatile economic conditions.

This guidance is designed to ensure that the impact of reduced revenue, profitability and liquidity due to COVID-19 are fully considered in going concern assessments and related disclosures.

With the roadmap to recovery now laid out by the Government, there are many advantages from businesses conducting an audit – not least providing a useful report on financial health and steps that can be taken to reduce risk to the company. 

If you are looking for advice on audits, please contact your Seymour Taylor representative today or email enquiries@stca.co.uk or call 01494552100.

This blog is for guidance only, professional advice should be obtained before acting on any information contained herein. The information was correct at time of publishing 22 March 2021.