Auditors will be crucial to helping businesses survive as the economic fallout from Coronavirus hits, but they need government and market clarity to be able to assist, according to Smith and Williamson’s head of professional practice, Giles Murphy.
The government announced a £350bn stimulus package and Chancellor Rishi Sunak reiterated his “whatever it takes” mantra on Tuesday, but Murphy says auditors need clarity to assess how they can help businesses through the crisis.
“Auditors are having to operate and opine in a period of huge uncertainty at present. Hopefully as the weeks pass, we will start to gain some clarity on the longer-term implications.
“It’s less than 24 hours that the government announced a huge range of measures. And we’re going to take a little bit of time to work out what impacts they will have, whether businesses can apply for them what impact that will have on their cash flows, etc. So, I think while we’re in a fast-moving scenario, hopefully, at least we might get some clearer signs of what the impact of all this will be in the next days and weeks.
“I think we will move into a period where we, we get more used to the environment in which we’re operating in, and therefore, hopefully both in the way we do things, but also what we’re assessing, there at least might be some clarity,” Murphy says.
Murphy adds that auditors and businesses should be working together to see if they can wait for that clarity to emerge before signing off on a set of accounts.
“At this precise moment in time, if you don’t have to sign off a set of audited accounts you would probably agree with the client to defer a few weeks until we’ve got some greater clarity, because it is such a fast-moving scenario,” he says.
Technology mitigating losses already
Smith and Williamson’s head of practice also believes that the rapid advances in technology have been crucial in preventing the pandemic from causing more serious damage to the way audit functions.
“If this had hit five, six, seven years ago, I think it would have been much, much harder because so much more of the audit was done on the client site,” Murphy says. “But technology has moved on sufficiently that we can do a lot remotely.”
He adds that while nothing can replace the important face-to-face conversations that auditors need to have with clients, the ability to work away from the site is a huge benefit in these unprecedented times.
“The good news is that the vast, vast majority of what we do we can actually do remotely. It’s probably not as efficient because there is a need to have face to face conversations and in good auditing you would always like to be able to speak to someone face-to-face to answer some of the key questions, but a lot of it, the vast majority can be done remotely.”