PCAOB to Consider Revising Audit Evidence Rule

The board will assess whether it should change its standard to reflect the growing use of technology-based auditing tools.
Matthew HellerSeptember 9, 2020

The Public Company Accounting Oversight Board is making its own push to update standards for audit evidence to reflect the growing use of technology-based auditing tools.

The PCAOB said Tuesday that its staff is assessing whether there is a need to change its AS 1105 standard, citing advancements in technology that “are affecting the nature, timing, preparation, and use of financial information and, in turn, the nature and extent of information available to auditors.”

“Emerging technologies used in generating financial information could affect how auditors assess the accuracy, completeness, relevance, and reliability of audit evidence,” the board said.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

AS 1105 explains what constitutes audit evidence and establishes requirements for designing and performing audit procedures to obtain sufficient appropriate audit evidence. The PCAOB also noted that auditors are expanding their use of technology-based tools, including data analytics, to plan and perform audits.

The board’s move comes two months after the American Institute of CPAs updated its standard for audit evidence for private companies to recognize the increasing role that technology plays in audit procedures.

The AICPA has been encouraging accounting firms to take advantage of the latest auditing software that leverages technology such as data analytics, artificial intelligence, and machine learning to automate the audit process.

“Our substantially revised standard addresses the evaluation of audit evidence and has been modernized to reflect our current business environment,” AICPA chief auditor Bob Dohrer said.

The PCAOB has also launched a project to align its auditor independence rules with changes the Securities and Exchange Commission made to its requirements in June 2019 that address whether an auditor is independent when the auditor has a lending relationship with certain shareholders of an audit client.