Making Auditing Standards Fit-for-Purpose in a High-Tech World

Auditing standards urgently need to change in two respects. First, they should reflect that the vast majority of entities being audited already make significant use of technology in their operations and in preparing financial statements. Such use will continue to grow rapidly and become more complex. Second, the standards need to be revised to strongly promote – and perhaps require – the use of automated audit procedures, including data analytics. Despite leaders of the accounting profession calling for action now, however, auditors in general do not appear to share this sense of urgency. They may express agreement with the concept of a need for change in the near term, but resist any significant revisions of standards that would make such changes a reality. For example, in 2016, the IAASB Issued a Request for Input (RFI) on the growing use of technology in audits, especially data analytics. IAASB’s Feedback Statement on this RFI states that “most respondents believe that the principles in the extant ISAs are still appropriate and accommodate the use of data analytics, and caution against prematurely rushing to change requirements in the standards.” 

This is an excerpt from an article by Gregory Shields that appeared in the Summer 2019 issue of ThinkTWENTY20. A free copy can be obtained here. For a free subscription to ThinkTWENTY20, click here.

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