Question

(5+5=10 Marks)
According to ISA 520, analytical procedure means “the evaluation of financial information through the analysis of plausible relationships among both financial and non-financial data. It includes the investigation of identified fluctuations, or relationships that are inconsistent with other relevant information, or that differ from expected values by significant amount”. Corona virus or the COVID19 pandemic has affected most, if not all, of the business industries not only in Oman but all over the world. This is due to the imposed “lockdown” of areas affected by the pandemic to not spread the disease and worsen the situation. One of the industries that are considered affected by this pandemic is the Online Business/ Food Delivery Sector. Based on the news, many businesses are opting to provide online shopping and delivery services since customers don’t want to get out of their houses. Also, because employees are getting sick or afraid to contract the virus, only few are able to report to work. Assume that you are a member of an audit team assigned to analyze the effects of the
corona virus (COVID19) pandemic on businesses. Answer the following questions related to this business sector: Online Food Delivery (example Talabat) / Online Shopping (example Amazon).
Required: Answer the following questions on analytical procedures:
1. In your opinion, will this business sector be favorably or unfavorably affected by the COVID19 pandemic? Explain your answer focusing on the financial impact.
2. How could the auditor analyze the financial impact to the business sector given? Give at least two suitable examples of analysis that you can use to analyze the impact of the pandemic to a specific business belonging to this industry, like for example Talabat and Amazon.

Answer 1

Due to COVID 19 pandemic, almost all the businesses afftected unfavourably, but if we take example of Talabat : the online food delivery, undoubtedly, it impacted this business sector as well, because the orders rate have fallen badly and also the virus can be spreaded due to touch and food too. Also in case of online shopping taking example of amazon, the delivery or courier services were suspended whiich impact unfavourably on this sector as well.

But the positive or favourable part is that food sector is still operational while others are completeley suspended. Also the government has to reopen the online delivery serives soon because to avoid more people interaction. The online delvery serives are going to be of great revenue generacting. But these sectors have to take precautions llike food hygiene etc.