Auditing Implications of COVID-19

ACCT 461/561 – Prof. Kim READ THE INSTRUCTION CAREFULLY!!!

Auditing Implications of COVID-19

The COVID-19 crisis and related economic uncertainty present a unique set of challenges for companies

and their auditors. While U.S. regulatory authorities, such as Securities and Exchange Commission

(“SEC”) and Public Company Accounting Oversight Board (“PCAOB”), have been diligent in providing

resources and guidance on reporting, auditors still have an obligation to comply with auditing standards

and rules, and other applicable regulatory and professional requirements in all circumstances. This

assignment provides an opportunity for you to apply your knowledge obtained in Lesson 2 in the current

situation and think about how the global pandemic has changed the auditing environment (Note: For this

assignment, we will focus on overall auditing environment, rather than specific audit procedures, as

details of audit procedures are covered in later chapters).

Requirements:

1. Part I*

a. The coronavirus pandemic has posed operational challenges for all companies, causing

the vast majority of the workforce to work remotely. Discuss how the new working

environment (for both clients and auditors) might affect the auditors’ 1) responsibility

and 2) performance principles discussed in Chapter 2. You should address the effects of

the change on one or more specific elements of each principle.

b. Many companies have experienced economic fallouts from the coronavirus pandemic.

Some struggling companies have gone through downsizing, layoff, or even bankruptcy.

Discuss how the environment of continued economic uncertainty and turbulence might

affect the auditors’ 1) responsibility and 2) performance principles discussed in Chapter

2. You should address the effects of the economy on one or more specific elements of

each principle.

* While you can use any resource, as long as it is authoritative information, to address these

questions, I recommend starting from Center for Audit Quality’s Audit Profession Resources on

COVID-19 (https://www.thecaq.org/profession-resources/).

2. Part II

a. We will observe an example of an audit report that discusses the impact of COVID-19 on

financial reporting and auditing. Obtain the annual report (10-K) of News Corporation

for the fiscal year ended June 30, 2020, and find the independent auditor report written by

Ernst & Young (EY). In Critical Audit Matters (CAM) section of the auditor report, EY

discussed two auditing-related matters that arose during the 2020 audit and how they

addressed the matters.

i. Briefly explain how economic uncertainties due to COVID-19 affected financial

reporting of News Corporation and EY’s audit.

ii. Both matters require estimation of the future performance of the business. What

are 1) general challenges and 2) COVID-specific challenges that can arise when

auditing these accounts that involve subjective judgments? You can refer to your

earlier discussion in Part I to make an argument for this question but your

discussion should specifically address News Corporation’s CAM.

ACCT 461/561 – Prof. Kim READ THE INSTRUCTION CAREFULLY!!!

Note: The list above does not present a complete list of issues related to the topic. You may additionally

discuss other issues relevant to impacts of the pandemic on auditing in your paper.

Due Date

Monday, March 1. You should submit an electronic version to SafeAssign by the due date.

Format

• Length for the essay: minimum 1500 words (no more than 1800) (on double-spaced pages) PLUS a list of references (make sure you follow an appropriate introduction, conclusion and

reference format).

• Follow APA formatting guidelines: The guidelines are described at https://owl.english.purdue.edu/owl/resource/560/01/

• Margins: 1” (Left justification ONLY).

• Font: Times New Roman, 12 point.

• Headings and Subheadings: Use them as appropriate.

• Do not forget Page Numbers.

References

You must provide proper citations for all references used to avoid plagiarism. Any direct quotes must be

indicated as such. You must include at least THREE unique references (IN ADDITION TO the

textbook, and 10-Ks of News Corp). Wikipedia.com, random blogs, and class lecture notes do NOT

count as references! Include references in your paper using the author/year (e.g. Smith 2015)

parenthetical citation method with the full citation listed in the reference section (i.e., do not use

footnotes to list your references). A wealth of excellent resources exists at your disposal. I encourage

you to use popular and business press articles (New York Times, Wall Street Journal, Financial Times,

Business Week, The Economist, etc.), practitioner journals (Journal of Accountancy, CPA Journal,

Accounting Today, etc.), and academic journals (The Accounting Review, Accounting Horizons,

Auditing, etc.) to inform your research. You have access to these and many more through George Mason

University’s Library website.

Grading

You will be graded on content, grammar, and compliance with instructions. Your paper should be

professional in tone and free from grammatical errors.

Writing*: 20 points

Content: 15 points

Submission Total: 35 points

*Note: If your grade for writing is below 60%, you will be asked to rewrite.

Other Instructions/Suggestions

• Write a clear, concise Introduction: Your introduction should summarize your arguments and conclusion.

• Show your analytical skills. This assignment is not about how well you summarize what you read.

ACCT 461/561 – Prof. Kim READ THE INSTRUCTION CAREFULLY!!!

• Do not use lists, bullet points, contractions or the second person (e.g., “you”) in your writing (Note: The first person (“I”) is allowed).

• Be clear and direct! Professional writing must be as unambiguous as possible.

• A paragraph needs at least three sentences.

• You may only use up to two (2) SHORT direct quotes, which should be properly anchored in your paper (i.e., quotes should not disrupt the flow of your essay).

• Use passive voice sparingly.

Remember, you must submit a paper that is unique to this class. If you have written about this topic in a

prior class, you must either write a completely new paper or ask me for a new topic.

Students who want additional help with their writing should visit one of the writing center locations on

campus. Visit http://writingcenter.gmu.edu for more information.