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Audit Evidence

Audit Evidence. Bob Dohrer , Technology Working Group Chair and Audit Evidence Working Group Chair IAASB CAG Meeting, New York Agenda Item D March 5 , 2019. History of the IAASB’s Work on Technology and Data Analytics.

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Audit Evidence

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  1. Audit Evidence Bob Dohrer, Technology Working Group Chair and Audit Evidence Working Group Chair IAASB CAG Meeting, New York Agenda Item D March 5, 2019

  2. History of the IAASB’s Work on Technology and Data Analytics • Technology and its implications for audit and assurance is a key focus for the IAASB • Data Analytics Working Group established in 2015 • Project Advisory Panel • Consultation Paper issued in 2016: • Inform stakeholders about the IAASB’s ongoing work on technology, with a focus on data analytics, in an audit of financial statements • Obtain input on whether all of the considerations on the use of data analytics have been identified • Feedback Statement issued 2018 • Video on the IAASB’s work on data analytics is available at https://www.youtube.com/watch?v=GiZGrJkv3H8

  3. Technology: The Way Forward • Initial work focused on data analytics, but the topic is broader and encompasses: • The automation of audit and assurance tasks • Management’s or the practitioner’s use of blockchain, artificial intelligence (AI) • Technology-enabled remote audit and assurance work • Terms of Reference to be agreed for Technology Working Group • Communiquésto be issued to provide update on the how technology is being incorporated into the IAASB’s current projects • ED-ISA 315 (Revised) – use of automated tools and techniques • ED-ISQM 1 and ED-ISA 220 – use of technological resources • ISA 500 – implications of technology in obtaining and assessing audit evidence

  4. Technology and Audit Evidence Working Groups Data Analytics Working Group Emerging Technology Working Group Bob Dohrer- Chair of both WGs Audit Evidence Working Group (New)

  5. Audit Evidence: What is Driving the Need for Change? Professional skepticism ISA post-implementation review Technology • AI, robotics, blockchain, cloud computing, social networks and new digital currencies and payment platforms • How audits are performed (use of automated tools and techniques, such as data analytics, robotics and AI) The audit environment • Corporate failures • Poor results of external inspections

  6. Audit Evidence: What are the Areas that may Need to be Considered? • Is the objective of the standard still appropriate? • Important relationships to other standards (ISA 200, ISA 315 (Revised) and ISA 330) • How does information obtained through emerging audit techniques fit within the audit evidence model (i.e., tests of controls, substantive procedures, inspection, observation, inquiry etc.) • Is the definition of sufficient appropriate audit evidence still appropriate? • Sufficiency currently focused on quantity • Desire to incorporate concept of persuasiveness (professional skepticism) • Embedding concepts to enhance professional skepticism • Enhancing how the standard deals with contradictory evidence or obtaining evidence in an unbiased manner • What affects the determination of whether sufficient appropriate audit evidence has been obtained? • How does the nature, timing and extent of the audit procedures affect this determination?

  7. Audit Evidence: What are the Areas that may Need to be Considered? • Is the requirement addressing the relevance and reliability ofinformation to be used as audit evidence still appropriate? • Increasing availability of information,new sources of information, changes in how information is generated • What other attributes should be considered (e.g., completeness and accuracy)? • Are the requirements addressing selection of items for testing still appropriate given new audit techniques? • Is it still appropriate that the requirements dealing with management experts are located in ISA 500? • Various areas in need of modernization – e.g.: • Definition of accounting records • Statements that are factually questionable (such as “reliability of audit evidence is increased when it is obtained from independent sources”) • More examples that recognize emerging tools and techniques

  8. Audit Evidence: AICPA’s Audit Evidence Project Overall Objectives The ways that business is transacted and reporting takes place has changed and thus information evaluated by the auditor is different than in the past.

  9. Audit Evidence: AICPA’s Audit Evidence Project Attributes of Information Attributes are considered in the context of other attributes

  10. Audit Evidence: AICPA’s Audit Evidence Project Timeline

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