A few more articles as you work through your audits, reviews, and compilations during the pandemic. Stretch question at the end: what are going concern implications if a third of grad MBA students will defer classes a year if they are not on campus and just under half expect a large tuition discount if classes are online?
3/25/20 – Financial Management – Ethical leadership at a time of crisis – Encouragement to maintain high ethical standards in time of turmoil and uncertainty. Summary of tips: Be transparent, be empathetic, be available.
4/1/20 – AICPA – Addressing pandemic-related audit challenges – Reminder that while creative techniques can be used to perform audit steps, the professional standards have not changed. Article points to following document:
4/1/20 – AICPA’s Center for Plain English Accounting – Consequences of COVID-19 – Potential Auditing Challenges – Agility and creativity is needed to complete audits. Document is a reminder that the professional standards still need to be complied with because they have not changed.
Document reminds us there are a range of possible scope limitations in an audit. Discussion includes a range of issues:
- Professional skepticism & audit evidence quality
- Physical inventory observations
- Access to client records
- Understanding and testing of internal control
- Confirmations
- Audit planning
- Going concern assumptions and related disclosures, including forecasts
- Subsequent events
- Manager representations, including electronic signatures
- Fraud risk
4/2/20 – Wall Street Journal – Remote Work, Coronavirus Disruption Pose Hurdles for Auditors – Reminder on issues to keep in mind:
- Observing inventory
- Valuations
- Changes or deterioration of internal controls
- Gathering audit evidence
3/31/20 – TaxProf Blog quoting Poets & Quants – A Third of MBA Admit May Defer; 43% Want Tuition Lowered If Classes Are Online – To stretch your mind in terms of going concern analyses, consider a survey of 300 students admitted to top tier MBA programs. About a third of them may defer attending class by a year if the program is only online in the fall. Just under half of the students (43%) expect a drop in tuition of under half (37%) if classes are online.
What is the expected value of the reduced income if 33% of students delay a year, 43% expect a one-third drop in tuition, and 24% want to move forward with full tuition even if online? What does that do to your going concern evaluation?