Dec 22, 2023
The Accounting and Financial Reporting Council (AFRC) issued Audit Focus to emphasize the importance of remaining vigilant about the financial and audit implications that may arise as a result of the continued deterioration in economic conditions and the overall performance of listed companies. Auditors are expected to improve the quality of work in upcoming year-end audits through heightened professional skepticism on key risk areas in the Audit Focus.
In times of economic turbulence, ensuring audit assurance becomes crucial as public confidence and trust become more vulnerable. With the current economic circumstance of high interest rates, inflationary pressure, and credit crunch, auditors should exercise due diligence in addressing areas that are susceptible to the impact of rising costs, alterations in contract and pricing terms, changes in credit risks, and the potential pressures or incentives for management to commit in financial reporting fraud.
The key areas requiring particular attention of auditors include, but are not limited to:
a. Revenue recognition;
b. Impairment assessment;
c. Fair value measurement of assets or financial instruments;
d. Provision for onerous contracts;
e. Going concern assessment; and
f. Fraud risk assessment.
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