The Public Company Accounting Oversight Board on Friday released its latest “Conversations with Audit Committee Chairs” update, this edition focusing on the effects of the ongoing coronavirus pandemic.
The update explains how “[m]ost audit committee chairs indicated that they are contending with new or increased risks associated with the effects of COVID-19,” including in the areas of cyber-security, employee safety and mental health, going concern, accounting estimates, impairments, international operations, and accounting implications of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. But it also suggests a silver lining of sorts in highlighting increased communication between audit committee chairs and auditors that is expected to extend as the pandemic plays out.
“Audit committee chairs were generally satisfied with the amount, type, and frequency of communication with their auditors,” the PCAOB notes. “Several also noted that, as the pandemic continues, new risks and uncertainties may arise and that they expect to stay engaged with both management and auditors to understand how they are addressing emerging issues.”
It isn’t a stretch to expect greater communication efforts to extend beyond the pandemic—the Institute of Internal Auditors’ recent overhaul of the Three Lines of Defense Model to focus on greater collaboration between the lines suggests many professionals believe such to be a needed improvement. The PCAOB notes the following forms of communication with auditors that audit committee chairs described as particularly helpful:
- Discussions about trends auditors are seeing across their client base, particularly those pertaining to industry peers;
- Presentations on areas of the audit that may or will warrant increased attention due to the effects of COVID-19, as well as how the auditor plans to approach those areas; and
- Audit firm resources and webinars with industry-specific content.
Of the risk areas noted above, the PCAOB said remote work and the cyber-security implications associated with leaving the office was the most prevalent concern raised by audit committee chairs. Among feedback received was a tip that having issuer data stored in the cloud helped eased the transition to remote work for several committee chairs.