Questions Business Owners and Management Should Consider in the COVID-19 Environment

Questions Business Owners and Management Should Consider in the COVID-19 Environment
As Business Owners, Executive Directors or Key Management weigh the practical challenges of accounting, reporting and disclosing the impacts of COVID-19, the following series of questions are designed to assist Business Owners and/or Management in execution of their oversight roles and responsibilities to ensure the issuance of transparent and reliable financial reporting.

Fraud Risk Specific Questions:

• What unintended consequences of COVID-19 may increase incentives or pressures on management or employees that may result in the override of controls?
• Are we able to ensure continued proper segregation of duties and monitoring controls given changing physical work situations?
• Have any significant risks or material weaknesses been identified as a result of impacts from COVID-19?
• Are there known impediments—either by management or by your CPA Firm —that may delay timely filing of financial statements? (e.g., lack of access or ability to obtain audit evidence or other information)
• What additional resources or expertise may be needed by management to properly account for judgments or estimates or changes related to circumstances brought on by COVID-19?
• Does my CPA firm have the depth of or access to resources adequate to address complex accounting and auditing questions, including industry-specific matters, as they arise?
• Does my management teams, have the ability to properly supervise and direct the work of their staff and teams?
• Has COVID-19 impacted circumstances that may call into question the entity’s ability to continue as a going concern? What are management’s plans to address?

Accounting and Reporting-Specific Questions:

• Has management adequately assessed changes in risk factors impacting our business? Are these appropriately reflected in our financial statements?
• Has management properly identified significant accounting areas where impacts from COVID-19 are likely? Has management further accounted for related income tax effects of these impacts?
• Have we properly accounted for and disclosed changes in significant estimates and judgments impacting the financial statements?
• Has management, along with the your CPA Firm, identified applicable relief opportunities with respect to the 2020 CARES Act and appropriately factored these into the accounting and reporting, including income tax effects, within the financial statements?
• Do we have a requirement to comply with the Uniform Guidance (Single Audit Act) related to any coronavirus relief stimulus funding that may have been received?
• Have management identified significant or industry-specific matters related to the interaction of the CARES Act and GAAP or GAAS impacting our financial statements that need regulatory consultation?
• Has new information arisen regarding COVID-19 events contained in previously filed financial information that requires updating of current disclosures?

Corporate Governance-Specific Questions:

• As Business Owners and/or Management, how are we maintaining our education with respect to COVID-19 considerations, relief efforts, and related risks and opportunities?
• Are we appropriately engaging with internal and external stakeholders and providing transparent and consistent communications about significant impacts on our business?
• Are we allocating enough time and making ourselves available to discuss critical issues as they arise with business owners, management, the auditors or our board of directors?
• Are we keeping the company owners or full board or directors appropriately updated as to significant challenges with respect to financial accounting and reporting?
• Are we considering responses to anticipated questions from company owners or board members during upcoming annual meetings?
• Is management actively and effectively engaging with lenders, members and other stakeholders in a timely and productive manner and are the results of those engagements reflected in the financial accounting and reporting?
• Are we, as the CFO or Controller, appropriately considering additional risks that have arisen related to other areas such as COVID-19 cybersecurity and data privacy risks?

We have included a two page checklist from the Association of Certified Fraud Examiners (ACFE) to provide you with an overview of the prevention processes. You may also find it on their website here.

Let Us Help
Wessel & Company would also be available to perform your organization’s fraud risk assessment check-up. If you would like additional information on the fraud risk assessment check-up, please contact Steph Stohon (sstohon@wesselcpa.com) or Melodie Lake (mlake@wesselcpa.com), or by calling 814.536.7864.