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PCAOB Proposes New Rules for Technology Use by Auditors

S.J. Steinhardt
Published Date:
Jun 27, 2023

iStock-519089329 Audit

The Public Company Accounting Oversight Board (PCAOB) has proposed amendments to its current standards on the use of technology by auditors.

The proposed amendments, “designed to improve audit quality and enhance investor protection by addressing the growing use of certain technology in audits,” include changes to update aspects of AS 1105, Audit Evidence, and AS 2301, The Auditor's Responses to the Risks of Material Misstatement.

The amendments would be more specific in updating the standards to address technology-assisted analysis, which is increasingly being used by registered public accounting firms to obtain audit evidence. The proposal would bring greater clarity to auditor responsibilities in the following areas: using reliable information in audit procedures; using audit evidence for multiple purposes; and designing and performing substantive procedures.

“The proposed amendments are designed to reduce the likelihood that an auditor who uses technology-assisted analysis will issue an opinion without having obtained relevant and reliable audit evidence,” the Board stated, listing the key provisions of the amendments as:

● Specifying considerations for the auditor’s investigation of items that meet criteria established by the auditor when designing or performing substantive audit procedures;

● Specifying that if an auditor uses audit evidence from an audit procedure for more than one purpose, the procedure needs to be designed and performed to achieve each of the relevant objectives;

● Providing additional details regarding auditor responsibilities for evaluating the reliability of external information maintained by the company in electronic form and used as audit evidence;

● Clarifying the differences between tests of details and analytical procedures, and emphasize the importance of appropriate disaggregation or detail of information to the relevance of audit evidence; and

● Updating certain terminology in AS 1105 to reflect the greater availability of information in electronic form and improve the consistency of the use of such terminology throughout the standard.

“The use of technology by auditors and financial statement preparers never stops evolving, and PCAOB standards must keep up to fulfill our mission to protect investors,” PCAOB Chair Erica Y. Williams said in a statement. “Today’s proposal is another key part of our strategic drive to modernize PCAOB standards.”

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