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Law360, London (March 18, 2020, 2:09 PM GMT) -- Germany's financial regulator said Wednesday that accounting companies will be temporarily allowed to complete audits of businesses remotely to minimize the spread of the new coronavirus.
The Federal Financial Supervisory Authority, known as BaFin, said that auditors will not have to conduct on-site inspections when checking company accounts. German companies must therefore ensure that the documents required by auditors are made available electronically.
And BaFin said that it will allow accountants to breach account deadlines without formally notifying the regulator if a full remote audit is not possible because they do not have sufficient electronic access to all documents that they require.
BaFin said normal deadlines won't be enforced if a comprehensive accounting isn't possible because of lacking electronic access to required documents.
"BaFin will not act on possible deadline breaches in these cases," the regulator said.
It said that moving away from on-site inspections is an exception that will apply only during the coronavirus pandemic to combat its spread.
The U.K.'s audit regulator, the Financial Reporting Council, told accountants on Monday that they must continue to complete their work to proper standards, even if this means delaying company reporting.
But the FRC acknowledged that some companies and auditors are facing practical difficulties in preparing accounts during the pandemic, given restrictions on travels, meetings and access to business sites. Audit firms may need to consider developing alternative audit procedures when gathering information, the regulator recommended.
Other regulators have advocated social distancing to contain the global outbreak of the COVID-19 disease. The European Banking Authority recommended last week that national watchdogs postpone site visits and give banks more time to submit supervisory reports.
The EBA said at the time that, as a result of the pandemic, it will delay its biennial stress tests for banks until 2021 so that lenders can focus on their operations and support their customers.
--Editing by Tom Mudd.
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