The Impact of the COVID-19 Pandemic on the External Auditor's

Effort and His Opinion on the Firm is Going Concern

ABEER ABDALLAH MHAMMED GRAYB1, NASARELDEEN HAMED AHMED ALNOR1,2,*,

EID MAHMOUD ABOZAID1, EBRAHIM MOHAMMED AL-MATARI1,

ADAM MOHAMED OMER4, MOHAMED ELNAIR MOHAMEDAIN KHOGALY2,5

Jouf University,

SAUDI ARABIA

Applied College at Muhyle, King Khalid University,

SAUDI ARABIA

Al-Khafji University College, University of Hafr Al Batin,

SAUDI ARABIA

the firm's going concern after and before the (Coronavirus) COVID-19 pandemic. The results show that the

COVID-19 pandemic is not significantly associated with the external auditor's effort and opinion on the firm is

of concern (OGC). The COVID-19 pandemic has prompted external auditors to step up their risk assessments

and scrutiny procedures. Firms’ financial stability, liquidity, and capacity to carry on business operations in the

face of the pandemic's economic uncertainties are all areas which auditors are closely monitoring.

going concern, audit, Saudi Stock Exchange, Saudi Arabia.

Received: January 15, 2024. Revised: July 7, 2024. Accepted: August 2, 2024. Published: September 6, 2024.

was transmitted from one person to another to most

or all countries of the world until the number of

infections globally reached more than 7.5 million

people, and the number of deaths reached more than

420 thousand people. The world was directed to

combat it through social divergence, banning

gatherings and roaming, closing institutions,

performing work from homes, home quarantine, and

The precautionary measures of the COVID-19

affected sales volume and profits to the extent that

affected the going concern of some establishments,

and there was a need for information regarding the

extent of going concern of the establishment, [1].

the information that comes from business

establishments, including information about the

external auditor to assess the entity’s ability to

continue and express that, in his report on the audit

of the financial statements, [3] and given the impact

of the COVID-19 pandemic on business going

concerns, the external auditor’s responsibility

increases.

instructions were applied due to the COVID-19

pandemic, it became difficult for the auditor to

the financial statements and increases the fees of the

audit process.

COVID-19 pandemic on companies’ businesses,

which is reflected in their financial statements and

has an impact on the process of auditing those lists;

however, this impact is possible due to the lack of

sufficient evidence from the business environment,

and the audit process includes many variables,

including planning the audit process, collecting

following research questions:

external auditor's effort?

of the going concern of the firm?

of the COVID-19 pandemic on the effort of the

external auditor and his opinion on the going

concern of the firm through a practical analysis of

Saudi stock market businesses before and after the

COVID-19 pandemic.

Globally, the COVID-19 pandemic has posed

hitherto unheard-of difficulties for industries and

occupations such as auditing, especially for external

auditors who are responsible for evaluating the

continuity of their clients' enterprises, [4].

restrictions on liquidity, disruptions in the supply

chain, and government support initiatives, [6]. We

also examined how auditors considered these

variables when determining whether a business

could continue as a continuing concern, [7].

In [8], the authors aim to understand how

auditors classified the effects of the coronavirus

(COVID-19) on the yearly financial statements of

corporations as Key Audit Matters (KAM) in their

reports, as well as the variables influencing such

perspective of external auditors. One of their study's

most significant findings is that since the

coronavirus pandemic broke out, auditors have had

to take on new responsibilities. These include

ensuring that computer networks are reliable,

developing creative ways to communicate with

clients, and implementing cloud accounting to

comply with distance requirements, [9]. In [10], the

authors aimed to determine how key audit matters

(KAMs) in the COVID-19 pandemic new audit

consequences of COVID-19. and excellent reviews,

[10].

in the form of steps that need to be carried out,

which differ from item to item of the financial

statements, and by following them, the objectives of

the external audit can be achieved. These steps are

called the external audit program, which includes

procedures, including examination, observation,

approvals, comparisons, and analytical and critical

examination, [11].

objective of auditing the financial statements is to

completely identical to the results of the previous

performance to reach the planned goals through the

following steps:

with due diligence throughout the planning process

to avoid unworkable inspection requirements or

writing a finding of something inconsistent, [14].

COVID-19 reduced the auditor’s effort, as after

March 2020, the auditor did not go to the

headquarters of the organization he was auditing but

rather worked remotely using technology and the

Internet, [15].

In [16], the author believes that the development

of the auditor's training in science and practice

financial instruments and understand accounting

models, financing models, mathematical and

statistical models, and other economic models.

The auditor prepares a list of the most important

effective control activities and the most important

fundamental changes that occurred in the control

environment, each separately, and sets a vision for

the organization's audit committee discussion. It

must be adhered to, develop an incentive system,

design environmental management systems, verify

evidence of proof means all the facts that are

presented to the human mind to enable him to make

a specific decision on a controversial subject, and

[18] believes that the evidence of evidence is that

the auditor obtains from data and information from

various sources, to obtain sufficient and appropriate

evidence according to the approved statistical

methods with the personal judgment of the auditor

to support the opinion of the auditor in the financial

statements. [19], believes that evidence is a set of

information and data that can be easily verified,

related to certain operations under examination,

which have an impact on the formation of a neutral

technical opinion on the annual financial reports of

business establishments.

difficult because of the Covid-19 pandemic due to

evidence or interviewing individuals to obtain

rational justifications, and the COVID-19 pandemic

requires setting up an audit plan in a different way

than its predecessor to obtain appropriate and

sufficient evidence electronically and using video to

express his opinion, [20].

must make reasonable efforts to obtain sufficient

and appropriate evidence as to whether the

accounting estimates of the organization under audit

financing sources, and changes in prices. An

example of the impact of the COVID-19 pandemic

is the presence of idle capacity and a decline in the

value of inventory, which leads to an increase in the

cost of one unit and its deviation from the standard

cost, and the auditor must use the following

methods when examining accounting estimates:

pandemic affected how companies present and

disclose subsequent events based on the date of the

organization’s financial statements and reports.

Subsequent events occur between the date of

preparing financial statements and reports, and

before their issuance is approved.

In light of the findings documented in the literature,

this study aims to further this discussion by

examining the aforementioned link in Saudi Arabia.

We frame our hypotheses as follows:

In light of the findings documented in the literature,

this study aims to further this discussion by

examining the aforementioned link in Saudi Arabia.

We frame our hypotheses as follows:

concern, [23]. The current study relied on an

empirical study of non-financial companies listed on

the Saudi Stock Exchange through a content

analysis of annual reports during the period 2018-

2021; Information was gathered from the websites

of the businesses and Tadawul. Statistical analysis

was performed using out. Regression, correlation,

and descriptive analyses were conducted.

variable was measured using inventory +

customers/total assets, according to [20].

a dummy value = 1 in reporting that going

concern within the audit report; value = zero

Independent variable: COVID-19 pandemic

This variable was measured using a dummy value of

1 in the period after the COVID-19 pandemic;

Value = zero in the period before the COVID-19

pandemic.

Control variables:

3.4 Model

The following multiple regression model was

estimated to test the hypothesis:

used in this study.

Table 1. “Summary of variables measurement”

Table 2. Correlations results H1

coefficient, which shows a weak negative

correlation of greater than -0.5 for both AE with

The regression analysis results used to test the

hypotheses are displayed in Table 3. Findings

related to the external auditor's effort (AE) variable.

The coefficient B is found to be not significant,

which means that there is a not significant impact of

the COVID-19 pandemic on the External auditor's

effort at a significant level of more than 0.05, which

indicates rejection of the alternative hypothesis and

the acceptance of the null hypothesis, which states

associated with External auditor's effort (AE)”

Regarding the control variables, the findings in

Table 3 reveal that the effect of financial leverage

and audit client losses do not have a significant

19 and a weak positive correlation of less than +0.5

for OGC with COVID19, LOSS and LEV. And

audit offices by developing a plan for training and

continuous professional development on the use of

information technology and artificial intelligence in

the audit process as part of the quality requirements

of the audit office. One limitation of this study was

data availability.

The paucity of information is a proxy for

(OGC). Further, future research may also use the

size of the audit office as a modified variable

context in this relationship.

The study's conclusions call for greater

examination and effort since the coronavirus disease

(COVID-19) epidemic has made external auditors

more watchful and diligent. To obtain a thorough

knowledge of the company's reaction to the

pandemic, external auditors were compelled to

participate in more regular and transparent contact

working arrangements, and physical access

limitations to client locations. and not sway the

auditor's assessment.

Temporal analysis, which examines the

development of external auditors’ efforts and their

assessment of business continuity during and after

the pandemic, is a possible new component or angle

of research on the impact of the COVID-19

pandemic on external auditors’ efforts and opinions

on business continuity. An examination unique to

facing disruptions caused by the pandemic.

Acknowledgement:

The authors extend their appreciation to the

Deanship of Scientific Research at King Khalid

University for funding this work through a large-

group Research Project under grant number

(RGP.2/131/45).

This work was funded by the Deanship of Scientific

Research at Jouf University under Grant Number

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The authors made equal contributions to the current

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This work was funded by the Deanship of Scientific

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The authors have no conflicts of interest to declare.