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COVID-19 and evolving risks for money laundering, terrorist financing and cybercrime

Dec 16, 2020

On December 16, 2020, the International Ethics Standards Board for Accountants (IESBA) and the Staff of Chartered Professional Accountants of Canada (CPA Canada) jointly released a Staff Alert, "COVID-19 and Evolving Risks for Money Laundering, Terrorist Financing and Cybercrime".

This document highlights the heightened risks of money laundering, terrorist financing and cybercrime in the COVID-19 environment. It describes the implications for both professional accountants in business and public practice.

Review the press release and publication on the IESBA's website.

IRBA, IESBA and IAASB jointly issue staff guidance on navigating the heightened risks of fraud and other illicit activities during the COVID-19 pandemic

Dec 16, 2020

On December 16, 2020, the International Ethics Standards Board for Accountants (IESBA), the Staff of the South African Independent Regulatory Board for Auditors (IRBA) and the International Auditing and Assurance Standards Board (IAASB) jointly released the publication, "Navigating the Heightened Risks of Fraud and Other Illicit Activities During the COVID-19 Pandemic, including Considerations for Auditing Financial Statements".

The publication highlights the heightened risks of fraud arising from the disruptive and uncertain COVID-19 environment and the implications for professional accountants in business, including accountants in government, and professional accountants in public practice, including auditors.

Review the press release and publication on the IESBA's website.

PCAOB COVID-19 spotlight: Insights and reminders for auditors

Dec 02, 2020

On December 2, 2020, the Public Company Accounting Oversight Board (PCAOB) released a new Spotlight publication, "Staff Observations and Reminders during the COVID-19 Pandemic", to provide insights from recent PCAOB inspections of reviews of interim financial information and audits.

This new publication builds on information provided in the PCAOB’s April 2020 Spotlight, COVID-19: Reminders for Audits Nearing Completion. Despite the ongoing challenges created by the pandemic, auditors remain responsible for conducting audits in accordance with PCAOB standards and rules, as well as other regulatory and professional standards. Although the staff observations in this publication relate to audits of public companies, many of the reminders, even where the term “public company” is used, may also be applicable to audits of broker-dealers.

Review the press release and publication on the PCAOB's website.

Fall 2020 Standard-setting Update – Prioritizing, supporting, and maintaining community during COVID-19

Dec 02, 2020

On December 2, 2020, the Accounting Standards Board (AcSB) announced that they are reprioritizing work to adapt to the new environment.

The AcSB continue to create helpful resources and have even launched a new online community platform to further pivot their operations to the digital environment.

Review the press release on the AcSB's website.

AICPA, IESBA and IAASB staff jointly issue guidance on important considerations regarding the use of specialists in the COVID-19 environment

Oct 06, 2020

On October 6, 2020, the Staff of the American Institute of Certified Public Accountants (AICPA), the International Ethics Standards Board for Accountants (IESBA) and the International Auditing and Assurance Standards Board (IAASB) jointly released the publication, "Using Specialists in the COVID-19 Environment: Including Considerations for Involving Specialists in Audits of Financial Statements".

The publication provides guidance to assist professional accountants in business and in public practice determine when there might be a need to use the services of a specialist to assist in performing specific tasks and other professional activities within their employing organizations, and in serving their clients in the COVID-19 environment. The publication also highlights relevant ethical considerations for accountants when thinking about using a specialist, as well as circumstances that indicate a need for a specialist during an audit of financial statements.

The publication was developed by the Staff of the AICPA under the auspices of a Working Group formed by the IESBA and national ethics standard setters (NSS) from Australia, Canada, China, South Africa, the UK and the US. Chaired by Mr. Richard Fleck, IESBA Deputy Chair, the Working Group’s mandate is to develop implementation support resources to assist accountants effectively apply the International Code of Ethics for Professional Accountants (including International Independence Standards) when facing circumstances created by the COVID-19 pandemic. The publication benefited from input from IESBA and IAASB Staff.

Review the press release and publication on the IESBA's website.

Integrated reporting and COVID-19

Sep 02, 2020

In September 2020, the South African Integrated Reporting Committee (IRC) published "FAQ – Reporting in a time of crisis".

The publication explores where and how an organization should show the impacts of the pandemic and the uncertainties that lie ahead in its integrated report.

Review the FAQ – Reporting in a time of crisis on the IRC's website.

The IRC also offers a dedicated website with publications, resources and examples of COVID-19 reporting in integrated reports.

Auditing, reporting and recovering from the pandemic

Sep 01, 2020

Review these articles

Audit committee and auditor oversight update

This Update summarizes recent developments relating to public company audit committees and their oversight of financial reporting and of the company’s relationship with its auditor. This update includes: (i) COVID-19 disclosure and financial reporting guidance: Part III, (ii) IIA and IFAC issue an audit committee call to action on COVID-19; (iii) G&A finds that 90 percent of the S&P 500 publish a sustainability report; (iv) Want to improve the reliability of your ESG reporting? The CAQ suggests asking your auditor for help; (v) Protiviti’s annual survey finds rising SOX compliance costs; (vi) Thinking of replacing your auditor’s tax services? Get ready for a higher tax bill – At least temporarily; and (vii) The Audit Blog

Auditing goes remote

The COVID 19 pandemic dramatically altered the day-to-day existence of most companies. Though businesses may have had remote-work contingency plans in place, few could have expected the need to implement these procedures almost overnight. And just as state governments enacted shutdowns requiring all non-essential workers to work remotely, many businesses were working with their auditors to finalize year-end financial statement audits and other attest reporting.

Key considerations for issuers and auditors regarding going-concern analysis

Issuers in the United States and their auditors have related, but distinct, obligations to evaluate on a periodic basis whether there is substantial doubt about the issuer’s ability to continue as a going concern. In normal times, this evaluation, conducted with an appropriate level of diligence, results as to almost all major public companies in the conclusion that there is no substantial doubt about the entity’s ability to meet its obligations in the months to come.

But these are not normal times. As the COVID-19 crisis takes an ever-greater toll on the American economy, and as multiple well-known companies declare bankruptcy, the going-concern assessment has taken on new relevance for issuers, auditors, and others in the financial-reporting community.  As a result, the number of issuer filings that contain a going-concern disclosure appears to have substantially increased. In this piece, we review some of the significant considerations that apply to the going-concern analysis from both the issuer’s and the auditor’s perspectives.

Digital Transformation: Powering the great reset

COVID-19 is a watershed moment for the digital transformation of business. The rules for success have changed and are ever more reliant on harnessing the power of digital models to create new value and experiences. Accelerating digital transformation, with purpose, is essential for companies to survive and thrive in the new normal. Successful leaders will now seize the opportunity to advance a new trajectory for digital transformation that aligns with the changing role of business: to be a powerful enabler of long-term value creation for all its stakeholders.

Boards beware: Increase in cyber attacks reveals new weaknesses

As the pandemic persists, corporate leadership must closely follow cybersecurity risks, vulnerabilities, and threats as bad actors take advantage of increased work-from-home scenarios—in which companies perhaps haven’t fully focused on security. These risks left unchecked have the potential to put company assets and viability in peril.

Reimagining the urban office

The Covid-19 pandemic has abruptly challenged a decade of corporate real estate and workplace design decisions by calling into question the purpose of large centralized office locations. With many organizations maintaining work-from-home policies for the foreseeable future, we argue that now is an optimal time to plan for a post-pandemic workplace strategy by revisiting the conventional wisdom behind the centralized office. A more distributed model throughout cities and geographic regions, we believe, would better support employee performance and organizational resiliency while contributing to the improvement of the urban landscape and local communities.

Don’t let the pandemic sink your company culture

If you are like many of the executives with whom we’ve been talking over the last few months, you and your leadership team invested years cultivating an effective culture — one that is both strategically relevant, because it prioritizes the behaviors essential to the success of your business, and strong, in the sense that employees trust that it is real and value it. Such cultures help companies attract and retain great people and contribute to fantastic bottom-line performance.

Emerging pathways towards a post-COVID-19 reset and recovery

The COVID-19 crisis and the political, economic, and social disruptions it has caused have exposed the inadequacies of our current economic systems. Amid global concern for lives, livelihoods, and the planet, leaders find themselves at a historic crossroads for shaping the recovery and are challenged to reset economies on a new trajectory of more inclusive and sustainable growth. This edition of the World Economic Forum’s Chief Economists Outlook sets out a high-level agenda for a path forward on three key challenges: How can economic policy be retooled to reduce inequality and improve social mobility? What will be the new sources of economic growth? How will success be defined?

Q2 Reporting: How should a U.S. public company quantify the impact of COVID-19?

U.S. public companies are thinking about how to quantify the effects of COVID-19 in their second-quarter public disclosures. Unlike the first quarter, they have now seen three full months of COVID-19 impact, with complex effects that varied within the period and across geographies and segments.  The effects are important for understanding Q2 results, and for anticipating results going forward – which in turn implicates a host of issues, including liquidity, funding, covenant compliance, impairment testing and going concern analysis. So there are good reasons to try to quantify the impact of COVID-19, and the SEC has encouraged “robust disclosure and engagement” in the COVID-19 context, with particular emphasis on the need for forward-looking disclosures.

Fast-track solution for COVID-19 dispute resolution

COVID-19 has made it difficult for many companies to perform some of their contractual obligations, giving rise to a high number of corporate disputes, particularly relating to the application of force majeure and change in law provisions. The volume and similarity of potential claims means traditional dispute resolution methods are too slow, burdensome and costly to expedite swift resolution. With this in mind, we have developed NRF Covid Resolve, a dispute resolution process supported through a single online platform, that aims to achieve an outcome for each dispute within six weeks – or four weeks if arbitration-only.

PCAOB posts conversations with audit committee chairs: COVID-19 and the audit

Aug 28, 2020

In August, the Public Company Accounting Oversight Board (PCAOB) released a publication that asked audit committee chairs how they are thinking about the effect of COVID-19 on financial reporting and the audit as they perform their oversight duties, given the unprecedented challenges for auditors, audit committees, and issuers created by the COVID-19 pandemic.

As part of the Public Company Accounting Oversight Board’s (PCAOB) strategic goal of enhancing transparency and accessibility through proactive stakeholder engagement, the PCAOB has committed to engaging more directly and more often with audit committees.

In an effort to provide transparency into that process and as part of the reporting out of what they heard, PCAOB staff released a new resource for audit committees, Conversations with Audit Committee Chairs: COVID-19 and the Audit.

Review the publication on the PCAOB's website.

COVID-19 and Application of Public Sector Accounting Standards

Aug 28, 2020

On August 28, 2020, the Public Sector Accounting Board (PSAB) released a publication on the application of PSAS to COVID-19-related financial reporting issues.

The COVID-19 pandemic significantly affected governments, businesses, and the public globally. Government responses and the COVID-19-related financial and economic consequences will need to be considered in financial reporting of public sector organizations.

Review the non-authoritative guidance on the PSAB's website.

APESB and IESBA staff collaborate on ethics guidance for professional accountants navigating COVID-19 circumstances

Jul 31, 2020

On July 31, 2020, the Staff of the Accounting Professional & Ethical Standards Board (APESB) and the International Ethics Standards Board for Accountants (IESBA) released a publication that illustrates the application of the IESBA Code to scenarios in taxation and valuation services.

The publication, Applying the Code’s Conceptual Framework in COVID-19 Circumstances: Scenarios in Taxation and Valuation Services, provides guidance to professional accountants in applying the conceptual framework in the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) during certain circumstances brought on by the COVID-19 pandemic.

The publication uses four hypothetical scenarios covering services or activities relating to taxation and valuation services. Two scenarios include guidance for professional accountants in public practice, and two scenarios are focused on professional accountants in business.

Review the press release on the IESBA's website.

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