IAASB Explores Growing Use of Data Analytics in the Audit
Bradley Williams | November 14, 2016 |
The International Auditing and Assurance Standards Board (IAASB)’s Data Analytics Working Group is furthering its work to understand how the use of technology, and more specifically data analytics, is able to enhance audit quality. The IAASB has released a Request for Input, Exploring the Growing Use of Technology in the Audit, with a Focus on Data Analytics. Supplementing this publication is a call for nominations for a newly formed Project Advisory Panel to further advise the IAASB and the Data Analytics Working Group on developments relevant to standard setting.
Technological change is occurring at a rapid pace, ushering in the capability to capture and communicate data digitally, on an unprecedented scale and almost instantaneously. With this change comes increased stakeholder expectations about how technology can be used to enhance the effectiveness and efficiency of financial statement audits. With this publication, the IAASB hopes to bring together relevant stakeholders to meet these expectations, which starts by fostering a dialogue about how innovative techniques can be used.
The Request for Input provides insights into the opportunities and challenges arising from the use of data analytics in financial statement audits and outlines the insights gained from the Working Group’s activities to date. The purpose of the Request for Input is to:
• Inform stakeholders about the IAASB’s ongoing work to explore the effective and appropriate use of technology, with a focus on data analytics, in financial statement audits; and
• Obtain stakeholder input and perspectives on whether all of the considerations relevant to the use of data analytics in a financial statement audit have been identified.
The work accounting firms, national standard setters, and others are doing to explore how data analytics can be used in the audit is encouraging. There is a risk associated with the use of new and innovative techniques for which there is not a strong framework within the International Standards on Auditing. Challenges result for audit oversight authorities when performing audit inspections and auditors are faced with the increased risk of getting second guessed on inspection and not having a clear basis in the auditing standards to substantiate the judgments made and procedures performed. While the International Standards on Auditing do not prohibit the use of data analytics, they need to better address increasing complexities, taking into account the rapidly changing technological developments in both the business and audit environment. The Request for Input highlights that timely feedback about innovations in this area, including views about the potential implications to the audit of today, will be of use in a number of the IAASB’s current projects.
The IAASB’s work in this area is not done, and the IAASB has an open mind as to the way forward. The Working Group is seeking input from investors, preparers, those in governance roles, standard setters, practitioners, internal auditors, regulators, academics, and other stakeholders in the external reporting supply chain to collaborate with and support the IAASB’s efforts to be innovative with the use of developments in technology to enhance audit quality in the public interest. The input will assist the IAASB in effectively responding to these developments in the public interest, including determining whether new or revised international standards or guidance may be necessary. Comments to the Request for Input are requested by February 15, 2017.
More information and project updates are available on the IAASB’s projects page.
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