Impacts of the Covid-19 pandemic on the audit of local government financial statements: experience from Indonesia

IMPACT

This article provides some lessons for auditing during emergencies. First, during a pandemic, the supreme audit board (SAB) can maintain stability and its legitimacy by completing statutory audits in line with the law and, at the same time, by giving clean audit opinions despite a lack of persuasive audit evidence. Second, regulators should develop audit regulations and guidance for audit during unprecedented events. Third, local governments and the SAB should invest in information technology in order to perform audit procedures remotely and virtually.

ABSTRACT

This article investigates the effects of the Covid-19 pandemic on the audit of local government financial statements in Indonesia. Auditors were only able to perform limited, simple audit procedures due to the large-scale social restrictions. Auditors completed their statutory audits by compromising in terms of accepting a higher audit risk, being more tolerant towards material misstatements and giving clean opinions.

KEYWORDS:

• Audit
• Covid-19
• financial statements
• Indonesia
• local government
• pandemic

Disclosure statement

No potential conflict of interest was reported by the author(s).