Introduction
Digital is a way of life! Almost everything that we do involves some form of interaction with technology. Organisations are heavily investing in digital transformation and changing their business models to become more customer and data centric.
International Auditing Standards (ISAs) were written in a completely technological ERA. ISAs do not prohibit but neither foster the advanced automated techniques and data analytics.
IAASB has established a Technology Woking Group (TWG) in order to (a) explore emerging developments in the effective and appropriate use of technology, including data analytics, to enhance audit quality; and (2)explore how the IAASB most effectively can respond to these emerging developments via new or revised International Standards on Auditing or non-authoritative guidance (including Staff publications) and in what timeframe.
As a result of this initiative, IAASB has issued more than publications exploring the use of automated tools and techniques(ATT) (including data analytics) in audit. More information about the technology project objectives, status and publications can be found in the following link.
Current publication
On 7 December 2021, IAASB issued non-authoritative support materials that highlights the impact of technology when applying certain aspects of the International Standards on Auditing (ISAs). It focuses on specific considerations for planning an audit in accordance with ISA 300, Planning an Audit of Financial Statements, that may be relevant when using ATT.
According to the publication, the auditor may consider using ATT when performing audit procedures, including risk assessment procedures and further audit procedures. The auditor may find that effectively deploying ATT involves proper consideration of the implications for the audit at the planning stage.
When establishing an overall audit strategy and developing an audit plan in accordance with ISA 300, the auditor may consider the possible use of ATT including when (a) Performing preliminary engagement activities, (b) Determining the nature, timing and extent of planned risk assessment procedures under ISA 315 (Revised 2019), (c) Determining the nature, timing and extent of planned further audit procedures at the assertion level under ISA 330.2, (d) Determining the nature, timing and extent of resources, including using the work of an auditor’s expert, necessary to perform the engagement, (e) Determining the other planned audit procedures that are required to be carried out so that the engagement complies with ISAs, and (f) Planning the nature, timing and extent of direction and supervision of engagement team members and the review of their work.
The possible use of ATT during the audit and how this may affect the auditor’s planning activities are matters for the auditor’s professional judgment given the circumstances of the audit engagement.
The publication is also addressing further the following questions:
- How does the possible use of ATT in an audit engagement affect planning activities?
- Who may be involved in planning activities when ATT may be used in performing audit procedures?
As technology evolves and new approaches to auditing develop, the relevance of a particular ATT and its relative advantages may change. The IAASB’s efforts on technology are ongoing, and include integrating technology considerations when revising the IAASB’s standards as part of other standard setting activities and develop further non-authoritative guidance that address the effects of technology when applying certain aspects of the ISAs.
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