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Technology's impact on the audit

Continuous technological developments are creating risks and opportunities for the audit profession today and into the future. Read this blog for updates on recent activities and to access our suite of helpful resources.

As technological advancements continue to occur rapidly, there is an urgent case for the accounting profession to embrace it or risk falling behind. This applies to the wider ecosystem of not only auditors, but also those responsible for audit regulation, standard setting, as well as the accounting profession at large. While technology is having a varying effect on the activities of these stakeholders, the opportunity exists for technology to elevate the quality of audits.

Read this blog to learn about:

  • the International Auditing and Assurance Standards Board's (IAASB) latest guidance on using technology in the financial statement audit and its current project to revise the audit evidence standard
  • an upcoming webinar featuring presentations from the Canadian public company audit regulator, an IAASB member, and an audit practitioner
  • the technology resources available through CPA Canada
  • future focused research and activities happening at CPA Canada, including the Competency Map 2.0

The IAASB's technology related activities

Audit Evidence Project

Modernizing International Standards on Auditing (ISA) 500, Audit Evidence to be adaptable to the current business and audit environment, and to better reflect the digital era, is a key driver of the current project to revise the audit evidence standard. The IAASB intends that the requirements of this standard will remain principles-based, while acknowledging in the application material that technology can be used to meet the requirements and perform audit procedures.

The standard will remain technology-neutral, not focusing on or promoting specific technologies. However, the IAASB is planning guidance that will include examples referring to specific technologies to demonstrate the principles in the standard. It will discuss current technologies and how they are being used today to obtain sufficient appropriate audit evidence. This will assist with current developments in auditing that are taking place from a technology perspective, while keeping the standard future-proof.

In Canada, the Auditing and Assurance Standards Board (AASB) adopts the ISAs as Canadian Auditing Standards (CAS). As such, the AASB project CAS 500, Audit Evidence will mirror the work of the IAASB.

Technology Working Group FAQs

The October 2021 Audit Quality Blog introduced the topic of automated tools and techniques (ATT) and the guidance available on using ATT in the audit. It also highlighted the activities of the IAASB, including the establishment of the Technology Working Group (TWG) to identify technology-related matters, which may have a more immediate response through developing and issuing guidance.

At the time of our October 2021 blog, the TWG had issued several pieces of guidance that focus on using ATT when performing audits. This guidance, summarized in our blog, related to:

  • identifying and assessing risks of material misstatement
  • addressing the risk of overreliance on technology
  • performing audit procedures
  • preparing audit documentation

In Canada, the TWG guidance is relevant for auditors when auditing under CAS, given its alignment with the ISAs.

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Audit planning when using automated tools and techniques

The IAASB’s newly issued guidance focuses on specific considerations for planning an audit in accordance with ISA/CAS 300, Planning an Audit of Financial Statements, which may be relevant when using ATT. The TWG guidance covers the following questions:

  1. How does the possible use of ATT in an audit engagement affect planning activities?
  2. Who may be involved in planning activities when ATT may be used in performing audit procedures?

The guidance also provides an example of how an ATT ‘champion’ may provide alternative perspectives when engaged in the planning process. These internal champions may have expertise in identifying opportunities for using ATT, designing and performing procedures using ATT, or responding to outliers, exceptions, deviations or unexpected issues that may occur.

Access the TWG FAQ December 2021 – Audit Planning When Using ATT.

If you found the TWG’s guidance pieces helpful, you can keep up to date with them on the IAASB’s Technology Focus Area page.

Tune in to our Technology in the Audit webinar

We are hosting an upcoming webinar featuring presentations from representatives of the Canadian Public Accountability Board (CPAB), the IAASB and Ernst & Young as they share their perspectives on technology. This live webinar will include:

  • a deep dive into the CPAB's recent publication, CPAB Exchange: Technology in the Audit and the opportunities, challenges and regulator expectations of audit firms using ATT
  • insight into the implications of technology on standard setting and the IAASB's work in this area, including current projects such as revisions to ISA 500, Audit Evidence
  • perspectives from a practitioner at Ernst & Young on how the firm leverages technology to develop and implement a digital global audit methodology, as well as its impact on audit quality
  • an opportunity to interact with the panelists during a live Q&A session

Practitioner's Pulse (May 2022): Technology in the Audit

Additional technology resources to support you today

Developments in technology are having a significant impact on the audit. The effects of the COVID-19 pandemic and the virtual working environment has further accelerated the rate of technology adoption and digitization, making it increasingly important to stay ahead of the digital curve.

Looking to build your understanding of technologies being adopted by your clients, or tools and technological advances that may impact your role as an auditor today and in the future? Our free, practical resources will help you build important skills of the digital age so that you can stay agile and adapt in this new reality. You can find resources covering artificial intelligence, blockchain and crypto assets, data analytics and more on our technology resources hub.

Our suite of resources also includes courses and certificates for those looking to build foundational knowledge on a specific topic, such as blockchain in our Blockchain Fundamentals Certificate.

The crypto industry continued to push ahead in Canada in 2021, with an increase in retail investor participation in the crypto space and the approval of the first bitcoin exchange-traded fund. The use of crypto and blockchain is expected to continue growing in 2022, with blockchain technology solutions becoming more common to support business operations across a wide range of industries. Do you have existing or prospective clients who may start adopting blockchain technology or transacting in crypto assets? If so, remind them to involve you, their auditor, early in the process. This could impact your client acceptance and/or continuance procedures and your audit approach.

The impact of technology on the future of the CPA Profession

While financial statement auditors today are faced with the challenges and opportunities brought upon by a technology-enabled era, it is important not to lose sight of how exponential shifts in technology, globalization, business models, geopolitics, and societal values and norms will impact how CPAs add value to the organizations they support. The role of CPAs, including auditors, needs to adapt to remain relevant in our rapidly changing world. Accordingly, CPA Canada continually reviews and evolves the key elements of our qualifications and the resources we use to support our students, members and the wider profession based on stakeholder outreach and future-focused research.

To this end, keep reading to learn more about:

Trust and ethics

As part of the Foresight initiative, CPA Canada has been exploring how technology—among other drivers of change—will impact the future of the accounting profession. As trusted leaders, the role of the CPA in this digital age will need to evolve to ensure that business technology aligns with the values of society, including fairness, security, privacy and transparency.

CPA Canada and the Institute of Chartered Accountants of Scotland (ICAS) are collaborating with the International Federation of Accountants (IFAC) and the International Ethics Standards Board for Accountants (IESBA) to research and report on how complexity in the professional environment, digital disruption, and mis/disinformation impact the importance of professional skills and ethical leadership. An exploratory paper laid the groundwork for an international roundtable event that further investigated these topics. A series of four thought leadership papers on the event’s outputs and other collaborated research activities are summarized below.

Paper 1 – Complexity: Guidance for ethical decision-making

In a complex world, many professional accountants (PAs) report being more frequently asked to take on roles or contribute to discussions that are outside of the traditional bounds of the profession and include more significant elements of uncertainty. Many of the skills we typically used to call on principally for strategic planning are now needed for daily decision-making. This paper offers practical guidance for PAs to better manage complexity and navigate ethical leadership.

Paper 2 – Technology is a double-edged sword

The second paper of the four-part series recognizes PAs' key role in helping organizations navigate technological changes in an ethical manner. It calls on CPAs to understand the opportunities and challenges brought forth by the information technology revolution and to pay close attention to the world’s new golden commodity: data. The publication also offers concrete steps that Professional Accountancy Organizations (PAOs) and individual PAs can take to pave the way forward in a progressively digitized world. Examples of the steps, for individual PAs, included in the report are:

  • build the technology skills needed to effectively marry technical knowledge with professional or enabling skills, particularly ethics
  • learn to work with machines and appreciate their strength, but also recognize their limitations; be questioning and skeptical to avoid overreliance
  • slow things down; build safeguards into the process to maintain a controlled pace of innovation that allows ethics to be considered from the outset

Paper 3 – Identifying and mitigating bias, mis/disinformation

Fake news, misinformation and bias are unfortunate realities that create opportunities and challenges for accountants responsible for providing reliable and trustworthy information. Drawing on perspectives from thought leaders and real-life examples, this paper provides insights on how PAs can ensure they are making sound decisions based on sound data.

Paper 4 – Coming soon

The fourth and final paper in this series will cover the topic of mindset and enabling skills, a competence paradigm shift.

Data governance

Another focus of the Foresight initiative is data governance. The explosion of data through the global economy has created a current environment aptly described as the 'wild, wild west’ of data, with no clear models to manage, value or verify it. As such, there is a need to harness this data and improve its quality to drive more universally informed decision-making. The Canadian accounting profession’s legacy in assurance and standard setting puts the CPA profession in a respected position to contribute to data governance.

Our Data Governance Primer discusses the role that PAs need to play in developing the standards and frameworks to govern the integrity and security of data. As trusted advisors, PAs are well-positioned to help organizations across all sectors and industries forge new paths in the data-driven economy. CPA Canada and IFAC further explore the PA’s role in data in a jointly-published discussion paper and in a new webinar.

If you are looking to advance your career and/or skillset in data management, CPA Canada also offers two programs that will help you build the knowledge and skills you need to evaluate complex information, create persuasive visualizations and support best practices in data management.

Foresight Podcast

Tune in to our Foresight Podcast for lively discussions about technological and social business changes and their effect on the accounting profession. These 20-minute episodes, featuring industry innovators and subject matter experts, will inspire you with thought-provoking questions, conversations and findings that can help leverage your skills and competencies. Seasons 1 and 2 of the podcast are now available! Listen directly through our browser or via other platforms including Apple Podcasts and Spotify.

Leading the Way: Competency Map 2.0 – Skills and competencies for up-and-coming CPAs

Recognizing that the world around us is changing at an ever-increasing pace, CPA Canada responded by initiating a process to reimagine the skills and competencies to equip new CPAs for the future, with a grounding in the critical knowledge, analytical skills and ethical mindset that the profession is already known for.

The new Leading the Way: Competency Map 2.0 (CM2.0), which lays the foundation for the CPA certification program, was launched in March 2022. With the goal of creating future-ready CPAs, the reimagined map addresses the impacts of a rapidly changing world, such as technology and automation, on the profession. The evergreen map is presented in a way that will allow it to adapt and transform as the world continues to evolve at an accelerated pace.

Varying levels of proficiency will now be required for CPAs in technology-related topic areas, such as big data, data analytics, and emerging and transformative technologies (e.g., artificial intelligence, intelligence augmentation, distributed ledgers and others). These competencies will also support ongoing learning, allowing post-designated CPAs to continue to perform to a high standard in order to maintain relevance.

With the map’s implementation planned for 2024/25, the profession is now working on how to operationalize it. This next step, Certification 2.0, will determine how the updated map will affect the CPA certification and education process, including how the new skills and competencies will be learned and assessed.

Keep the conversation going

With the exponential increase in emerging technologies, do you feel more is needed in standards or guidance to enhance your ability to incorporate technology in the audit? What practices and experiences can be shared with others to embrace technology to elevate audit quality? What are your views on the challenges and opportunities ahead for the assurance profession as a result of technology advancements and digitization? If you have ideas about research, guidance or support for the assurance profession, or would like to share what you’re seeing in practice, email me directly.


The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.