I support issuing this proposal, which would address the growing use of technology in audits. In particular, the amendments would update PCAOB standards to more specifically address aspects of designing and performing audit procedures that involve analyzing information in electronic form using technology-based tools. Evidence indicates registered public accounting firms are increasingly obtaining audit evidence by analyzing large volumes of information in electronic form. The proposed amendments are designed to increase the likelihood that audit procedures performed with the use of technology-assisted analysis provide sufficient appropriate audit evidence to support the opinion expressed in the auditor’s report.
Specifically, the proposed amendments would –
- Clarify the differences between tests of details and analytical procedures and emphasize the importance of appropriate disaggregation or detail of information used as audit evidence;
- Specify auditor responsibilities when performing multipurpose audit procedures;
- Specify considerations for the auditor’s investigation of items that meet criteria established by the auditor when designing or performing substantive audit procedures; and
- Specify auditor responsibilities regarding certain company-provided information that the auditor uses as audit evidence and emphasize the importance of controls over information technology.
The proposed amendments, if adopted, will modernize certain of our existing standards and demonstrate the PCAOB’s support for the use of technology, with appropriate guardrails to ensure that auditors do not over rely on company-produced information and that audit evidence obtained is relevant and reliable. Today’s proposed amendments are just the first step in our journey to address the growing use of technology in audits. We continue to monitor and gather evidence on the broader uses of technology. In addition, we launched the Technology Innovation Alliance Working Group, led by my fellow board member, Christina Ho, which will advise the Board on the use of emerging technologies that impact audits and their potential impact on audit quality. I look forward to their insight.
As the practice of auditing shifts, and reliance on technology-assisted procedures grows, our standards should not inhibit innovation, so long as such innovation results in reliable audit evidence that improves audit quality and therefore protects investors. I believe the proposed standards allow for innovation, while also protecting the interests of investors.
I would like to thank the many individuals involved in this proposal, including from the Office of the Chief Auditor Barb Vanich, Dima Andriyenko, Donna Silknitter, Rob Kol, Treazure Johnson, and Hunter Jones. From the Office of Economic and Risk Analysis, Mike Gurbutt, John Cook, and Nicholas Galunic. I would also like to thank my fellow Board members and my staff for their efforts towards this standard-setting project. Finally, I would like to thank the Securities and Exchange Commission’s (SEC) staff, including the staff of the SEC’s Office of the Chief Accountant for their support and assistance.