Covid-19 could be the catalyst for audit reform

There is increasing expectation that corporate reporting should provide a richer, more forward-looking and complete view of company performance. This includes non-financial areas such as managing climate risks or the treatment of one’s supply chains and employees.

These areas support a better understanding of the resilience of modern business models and are not currently reflected in most corporate balance sheets.

Access to reliable, timely, transparent and meaningful data and insights to inform this reporting is now more important than ever, allowing stakeholders – investors, employees, suppliers, government and regulators – to distinguish well-governed companies and their ability to mitigate disruption.

Audit needs to respond to this changing landscape too. Society rightly needs to have confidence in the completeness and accuracy of this reporting, and we recognise the critical role the audit has to play in that regard.

It’s time to drive the traditional, backwards-looking product to evolve. Audit should inform as well as assure, extending its scope to areas of broader public interest, not solely historic financial statements.

There is no doubt that Covid-19 has increased the challenges that businesses and auditors need to navigate. Take the risk around fraud for example – this subject has been central to the audit debate and with the recent increases in remote working and lower levels of supervision, the pandemic has heightened this risk.

The actions we take now must serve to accelerate our response to these risk areas, which will continue beyond the pandemic, and in doing so set the path for a stronger audit environment.