Question 1;

In Part A of the Assignment, you were asked to analyse Virgin Australia for their ability to meet the requirements of being a going concern for the period ending 30th June 2019. As we have witnessed, 2020 has seen the airline industry severely impacted due to the spread of Covid-19 on a world scale in the first few months of 2020. We are going to examine the impact of Covid-19 from an auditing perspective using Virgin Australia. Required: Assuming that the reporting date for Virgin Australia is 31/3/20 and Virgin were still trading at the 31/3/20 (ie they had not gone into voluntary administration1 ), explain how Covid-19 would have impacted on the planning of the audit for the period ending 31/3/20.

Additional information for question 1-

Undertaking the audit of Virgin Australia for the period ending 31/3/20 and your task is to provide a report to your audit partner to assess the impact of Covid19 on the planning of the audit of Virgin Australia. That is, you are in phase 1 of the audit. You are only required to focus on Covid-19 and how it would impact on the planning of the audit. The planning of an audit includes:

1. Gaining an understanding of the entity/industry within which the entity operates
2. Undertaking an inherent risk analysis
3. Developing an appropriate assessment of audit risk
4. Identifying the amount of evidence to collect and type of evidence to collect (audit evidence mix)
5. Assessing whether the entity is a going concern as per ASA570

It is recommended that you discussion addresses these as part of your answer to question 1 of the assignment. Your answer should also identify any specific accounts in the financial reports that may need to be investigated due to the impact of Covid-19 (and a brief explanation as to why these accounts should be investigated). You are not required to consider fraud in your discussion or the internal controls of the entity. You are not required to identify any control risks for this question - you may assume that controls are strong and therefore control risk is low.