Public Interest Responsibilities Must Remain Paramount in an Age of COVID-19
June 9, 2020
A Statement from the International Federation of Accountants
While the long-lasting societal and economic implications of CV-19 have yet to be fully realized, we have already begun to see the toll on the global financial ecosystem. Economic crises have historically served as a powerful catalyst for financial malfeasance, and this risk is no different in the current environment.
All professional accountants need to be attuned to this heightened risk and continue to exercise high levels of diligence, integrity, and professional judgment. The International Code of Ethics for Professional Accountants, including International Independence Standards, establishes the standard of behavior expected of a professional accountant. That is our public interest responsibility.
Professional accountants -- whether serving as members of a board or audit committee, organizational leaders, preparers or auditors -- are critical to the financial reporting ecosystem. And while it is not possible for our profession to prevent corporate failures, it is our responsibility to continue to provide fair and reliable financial reporting and disclosures that appropriately incorporate our best judgments, estimates, and assessments as well as being alert to the increased risk of fraud and financial misrepresentation.
In such a fast-changing and uncertain environment, management and board members, with their ultimate responsibility for preparing and overseeing financial reporting and communication, are urged to continually maintain an effective control environment, which will likely change or has changed as a result of adapting operating environments to remote working and other CV-19 demands. Auditors, likewise, should focus on the implications of any such changes to the control environment and any new or changed risks, and adapt their audit approaches accordingly to obtain sufficient appropriate audit evidence on which to base their opinions.
Because of the unprecedented nature of CV-19, greater transparency and disclosure of forward-looking information on an organization’s operating performance, financial position, liquidity and future prospects are more critical than ever even though current circumstances make this more challenging. Professional accountants in business need to make reasonable, good-faith judgments in the context, and on the basis of, information currently available. Transparency on known and material uncertainties, as well as robust processes and documentation supporting such disclosures, will help promote sound decisions, and auditors’ assessments thereon, that will stand the test of time. Importantly, this will also enable investors and creditors to make the most informed decisions possible.
Professional accountants also need to play a pivotal role in ensuring the continued ability of organizations to be resilient to the significant challenges they face in these difficult times. This applies to all organizations—big and small---across all sectors of the economy, and involves helping organizations focus on good governance, sound strategy and strengthening their business models.
Our actions today will have a significant impact on our reputation and standing tomorrow. By upholding the highest standards of our professional and ethical conduct during CV-19, and by challenging ourselves to exercise heightened diligence and being open and alert to further action needed, we will live up to our public interest responsibilities and continue to positively shape how our profession is viewed.
Recognizing greater levels of pressure and stress facing many accountants, professional accountancy organizations stand ready to offer support to their members in the form of advice, support, and counseling.