4 minute read 18 Jun 2020
Businesswoman using Tablet

Audit in a COVID-19 world: Interim results


Bob Forsyth

EY UK Centre for Board Matters Co-Chair

Committed to upholding our reputation for integrity and quality. An Arsenal supporting Aberdonian born in Trinidad with a passion for slalom water-skiing and collecting global marathons.

4 minute read 18 Jun 2020

As UK businesses move towards the post-lockdown phase of the COVID-19 outbreak, it’s timely to consider what audit committees will need to be aware of in their going concern assessments.

With most organisations navigating three response phases – resilience, recovery and resurgence – each of these has financial reporting implications. In this article we identify mandatory COVID-19 disclosures during this time of disruption.

Building resilience

Interim results season is approaching. The prime focus will be on capturing the output from business scenario analysis in a way that demonstrates the strength of operational and financial response. Audit committees and boards will be expected to help set the direction of such disclosures and challenge the efficiency of the process across the following areas:

Narrative reporting

We will see a dedicated COVID-19 section within reports, summarising the company’s response. Chair statements and business overviews will also include pandemic operational response information – including safety of people, customers and suppliers.

Dynamic corporate governance is another key output, with changes being made to the operation of the board and committees in order to enable more agile decision-making. Risk profiles should – and will – be recast for the new world.

Going concern

The strength of going concern and viability assessments will be increased to enable greater transparency and diligence – with responsibility for this falling on the audit committee and CFO leadership.

Scenario modelling is also vital, with new 18-24-month forecasts established, and going concern notes must achieve fulsome disclosure – explaining the management process, key assumptions, mitigations, and the level of uncertainty or dependency – in the projected positions.

Many companies will have new plausible scenarios that result in elimination of headroom on facilities or covenants, meaning more material uncertainties. Audit reports may now also reflect material uncertainties over going concern and COVID-19 uncertainties, and regulators will expect more diligence on assessments and disclosures.

Maintaining financial oversight

The immediate challenges will include producing accurate management and external financial reporting information remotely, and possibly without the same staff. As dividends return, formal documentation will be needed to verify that each dividend is distributable.

It’s critical for audit committees to take steps to review response plans, scenarios and business communications. Making sure internal audit teams have the resources they need to work remotely is also key – and that coverage returns quickly – to maintain the control environment.

Recovery and resurgence

Whilst senior leaders are focused on protecting the business and crisis management, the audit committee is well placed to help establish business strategy for restoring the resilience of the balance sheet, recapitalising as necessary.

Audit committees can also take a role in envisaging how pandemic-induced changes will be reflected in a fresh portfolio of risks and KPIs for consideration.

Additional next steps include: establishing a new assurance system – to reassure the board that lessons learnt can be used to strengthen future financial resilience; ensuring the financing structure has the flexibility to cope with shocks – communicating this through the viability statement; and improving the resilience, security and reliability of remotely operated IT and accounting systems.

Find out more

With the impact of the disruption from COVID-19 permeating all aspects of business, financial reporting is changing. To hear more from EY’s audit specialists watch our ‘Post lockdown considerations for audit committees’ webcast available on demand.

Further information

EY UK Centre for Board Matters.

For more materials on responding to COVID-19, explore EY UK's resources at: ey.com/uk/covid.

For more information on COVID-19 and financial reporting get our top 10 considerations here.

COVID-19 going concern assessment: Practical advice – Webcast available on demand.


With the disruption from COVID-19 impacting all aspects of business, audit committees will need to adopt a new approach to financial reporting. Find out more about mandatory COVID-19 disclosures for interim results season.

About this article


Bob Forsyth

EY UK Centre for Board Matters Co-Chair

Committed to upholding our reputation for integrity and quality. An Arsenal supporting Aberdonian born in Trinidad with a passion for slalom water-skiing and collecting global marathons.