Articles for CPAs during the pandemic – 4/2

The new conference room. Image courtesy of Adobe Stock.

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?

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