Advanced technology, including conducting remote audits with drones, can enhance audit quality. Such tools and other techniques are referenced in the guidance accompanying SAS No. 142.
The audit evidence standard is forward-looking — reflective of today’s business and auditing environment and written in such a way that the auditing standards can be applied to the present and future. In addition, the audit evidence standard is based on principles, reconsiders generalizations, and encourages auditors to broaden their view of evidence. Critical thinking and professional skepticism are encouraged.
Before you dive in to read the currently effective AICPA Statements on Auditing Standards (SASs), here are the highlights:
The audit evidence standard is principles based.
You won’t find a step-by-step procedure manual or a formula in SAS No. 142. What you will find are requirements and guidance that set up a conceptual framework on what to consider when evaluating audit evidence. This is not a “check the box” performance standard.
The audit evidence standard reconsiders broad generalizations that were once relied upon.
Given the evolving nature of business, information that can be used as audit evidence should be viewed through a different lens than the one used for the audit evidence standard issued a decade ago.
General rules from the days of the old standard aren’t necessarily true today. For instance, auditors shouldn’t assume that information obtained from an external source is necessarily better quality than information from an internal source.
Given the substantial increase in sources of information available to auditors today, it’s important to consider the reliability of information to be used as audit evidence regardless of its source.
The audit evidence standard focuses on a framework to evaluate audit evidence.
When evaluating audit evidence and assessing whether it’s sufficient and appropriate for the auditor’s purposes, it’s important to consider attributes of quality information such as accuracy, completeness, authenticity and whether it’s susceptible to management bias.
The audit evidence standard improves audit quality by emphasizing judgement.
Audit standards require auditors to think critically and maintain professional skepticism.
In evaluating audit evidence, critical thinking includes considering biases — availability bias, confirmation bias, anchoring bias and others, and exploring whether the audit evidence obtained corroborates or contradicts management’s assertions.
The audit evidence standard helps auditors work remotely.
By referencing examples of different types of automated tools and techniques that may be used in performing audit procedures, the standard highlights innovative ways of gathering audit evidence, regardless of the location of the auditor.
The audit evidence standard encourages auditors to broaden their view of evidence.
New automated tools and techniques provide auditors with access to greater amounts of information. Instead of relying on traditional techniques like audit sampling, practitioners may use technologies like audit data analytics to examine greater amounts of information and, in some cases, entire populations of transactions. This may include performing audit data analytics that may simultaneously accomplish the objectives of a risk assessment and substantive audit procedures, which leads to enhanced audit quality.
The audit evidence standard is intended to be “future proof,” and is effective for audits of financial statements for periods ending on or after Dec. 15, 2022.
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