FRC consultation addresses the impact of audit technology

Man using audit technology to improve data quality

FRC consultation addresses the impact of audit technology

A recent consultation conducted by the Financial Reporting Council (FRC) lists training and skillsets as the top concerns for using technology to enhance audit quality.

The use of artificial intelligence (AI) and machine learning (ML) is increasingly popular for improving audit quality. However, several audit firms and professional bodies who responded to the consultation point out that technology needs to be used at the right time, in the right place and by appropriately trained individuals.

There are also significant challenges in ensuring that high-quality client data is accessible in a reliable and consistent format. Many respondents agree that introducing a data standard will help build a ‘backbone’ for developing new technologies and facilitate the transfer of quality data between auditors and companies.

The ICAEW agreed that establishing a system for accessing client data would make it easier for clients and auditors, but also cautioned it is a “huge undertaking.”

Senior auditor at Wilder Coe, Caryl King, appreciates the challenges future audit professionals face as the industry moves from old manual working models.

“The use of data analytics and technology, in general, is becoming more common in audit. The potential benefit of this is improved audit quality with the ability to review large datasets and design more nuanced tests.”

Caryl acknowledges that two main challenges need addressing:

Is high-quality data available for all entities which require an audit?

Lack of high-quality data limits the utility of technology in an audit and;

Are staff appropriately trained to use technology in an audit?

“Investment in training is needed to ensure that auditors further develop critical thinking skills and professional judgement in order to use the tools at their disposal effectively. They can review the data analysis, identify risks and address these appropriately.

As more businesses shift to using bookkeeping software that delivers quality data and reporting, the first challenge should be overcome in the coming years. Having appropriately trained staff is even more necessary as a result.”

If you have any questions, please do not hesitate to get in touch with our team.

Caryl King
Partner at Wilder Coe
Caryl is experienced in the fields of Audit and the preparation of financial statements, having worked with a variety of businesses across a large portfolio of clients.