AICPA debuts new practice aid for tech-enabled auditing

The AICPA Auditing Standards Board’s Technology Working Group has developed a new practice aid, Use of Technology in an Audit of Financial Statements, that emphasizes how technology should be seen as a key enabler, elevating audit effectiveness and efficiency for the future.

“This practice aid is a very important tool to help auditors, especially those in small- to medium-sized firms, make full use of technology to drive efficient, effective and high-quality audits,” said Samantha Bowling, CPA, CGMA, chair of the Auditing Standards Board Technology Working Group and managing partner of Garbelman Winslow CPAs in Upper Marlboro, Md. “The Auditing Standards Board encourages firms to optimize the use of technology and we believe that relevant examples like those in the practice aid can help firms do that.”

With the issuance of Statement on Auditing Standards (SAS) No. 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, the first part of this practice aid, “The use of automated tools and techniques in the auditor’s risk assessment,” focuses on applying technology when performing risk assessment procedures.

The free, downloadable practice aid also discusses commonly used automated tools and techniques  and, through the SAS No. 145 example, highlights the differences between traditional risk assessment procedures and technology-enabled procedures.

The practice aid covers the following:

• The use of technology in performing risk assessments

• The value of obtaining an understanding of the entity’s use of technology to help auditors determine their use of technology

• Examples of automated tools and techniques for performing risk assessment procedures

Part 1 of the practice aid contains three modules:

• Module 1-A, “The benefits of leveraging technology in the auditor’s risk assessment and of obtaining an understanding of the entity’s use of technology,” is designed to help the auditor understand the benefits of using technology when performing risk assessment procedures in an audit of financial statements. It explains why the auditor’s risk assessment is important, highlights the importance of obtaining an understanding of the entity’s technology maturity, and provides insights into ways the auditor may want to use automated tools and techniques for risk assessment.

• Module 1-B, “Commonly used automated tools and techniques in the auditor’s risk assessment,” helps the auditor understand commonly used forms of automated tools and techniques and how they may be used when performing risk assessment procedures.

• Module 1-C, “Example of the auditor’s use of technology when performing risk assessment procedures,” is designed to illustrate a traditional risk assessment approach and how that may differ from a technology-enabled risk assessment approach.

Based on feedback received on Part 1, additional parts may be added to the practice aid to provide additional examples of how technology may be used.

To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.