FRC publishes responses to its discussion paper on the use of technology to enhance audit quality
21 Dec, 2020
The Financial Reporting Council (FRC) has published its analysis of the responses received to its recent consultation, Technological Resources: Using Technology to enhance audit quality.
Through issuing the discussion paper, which built on the FRC’s recent thematic review, The use of technology in the audit of financial statements, the FRC sought to gain further insight into the use of technology and its potential impact on audit quality.
The analysis incorporates discussion of the responses the FRC received as a direct result of its consultation, as well as discussion of other matters that have arisen throughout additional outreach and engagement with stakeholders.
Almost all those that responded agreed that the use of technology could significantly improve audit quality, when deployed at the right time in the audit process and, crucially, by those with the right training. Respondents also agreed that, whilst additional application material and guidance would be beneficial, the current assurance model and audit standards do not represent a significant impediment to the development and deployment of technology in audit.
Training and skillset were identified as many respondents’ primary concerns. A significant majority of respondents saw the recruitment of staff members with the right skillsets alongside the development of appropriate training for current staff (both trainees and experienced), as a priority.
Respondents also described significant challenges in accessing high-quality client data in a reliable and consistent format, meaning that the application of technological resources to improve audit quality can be practically challenging to deploy, requiring substantial work on the data itself before analysis can be conducted.
Where a consensus around a specific action that the FRC can take to address concerns has been identified, or where the FRC has determined that no action is currently necessary, this has been laid that out within the individual sections of the paper.
A press release and the full analysis is available on the FRC website.
Update 24 August 2021 - the FRC has also published guidance for auditors for dealing with outliers when using Audit Data Analytics. The guidance is available on the FRC website.
