Crisis management

How will the new situation affect accounting and auditing?

Mart Nõmper Mart Nõmper

Remote work is here to stay and it’s experiencing a renaissance thanks to the coronavirus. Auditors, accountants and other white-collar workers have recently been working mainly from home offices. At first, everything was unaccustomed and strange, but life has shown that people are very adaptable and can get by pretty well. In any case, we can expect that more and more audits and accounting procedures will be done without actually meeting face to face.

How has this affected us and what is to be expected in the near future?

The most recent trends show three major changes.

  1. Companies focus on their main line of activity, secondary activities will be ended, and new, often opportunistic projects will be postponed. Models for providing remaining activities will be reviewed because what worked for us before coronavirus may not work after the coronavirus crisis. The keywords are focusing on primary areas of activity, changes to business models, managing cash flows.

  2. Accounting and all support services become more efficient. All possibilities for increasing efficiency will be reviewed; the jobs and activities of the “good old days” will disappear if they don’t clearly generate value added. Work will be re-organised, and there will be increased reliance on use of software and remaining resources for solving issues. Keywords are efficiency, digital solutions, cloud-based.

  3. In difficult times, fixed costs are like a millstone around your neck, so the search is on for more flexible solutions and pricing models based on hours, pieces or other measurable criteria that respond more directly to changes in the volumes of work. Keywords are flexibility and outsourcing.

It’s a harsh but inevitable fact that not all businesses will survive. In difficult times, demand for assurance and trust will grow. Auditors are the providers of assurance in the financial world – an auditor’s assurance that financial statements are accurate increases the trustworthiness of the statements.

How will the work of auditors and accountants change in the near future?

  1. More audits will be conducted remotely. Electronic networks and devices make it possible. Digitised paper documents, e-invoices, e-invoicing processing environments and digital archives, cloud-based software with remote access, video conferencing, and more. Efficiency is one of the considerations driving remote audits, as it makes it possible to save time and money. Auditors spend less time on travel to and from the customer’s location. Stock-takings have already been conducted by video bridge, with an eye trained on monitoring the procedure from afar. This also saves time for the accountants and other employees of the customer’s business, as they do not need to clear their entire daily schedule for the auditor but can work with the auditor in parallel to other tasks.

  2. Secure solutions that support cooperation are used to a greater extent. Instead of sending files and information by email, which is low security, controlled access environments such as Dropbox, GDrive, OneCloud, etc. are in use. Yet it’s important to know how to use them the right way so that the increase in security is not illusory. Recommendation:  request a corresponding training from your IT department or an out of house expert or study reliable materials on the service provider’s website for how to use these environments in the secure and right way. The easiest path is to ask your auditor to set up a secure environment – a dataroom – where the audit firm will be the one responsible for the security and conformity to the requirements!

  3. Voluntary audits, reviews and other auditor services for certifying trustworthiness are on the upswing. This separates the chaff from the grain.

Stay calm, healthy and open to changes!

Contact us to discuss your company and our assurance services!