AICPA modernizes audit evidence standard for technology use

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The American Institute of CPAs’ Auditing Standards Board has released a new standard for audit evidence for private companies, updating the existing standards in recognition of the increasing role that technology plays in audit procedures.

The new Statement on Auditing Standards No. (SAS) 142 Audit Evidence aims to modernize private company auditing standards by addressing the emerging technologies used by both preparers and auditors, along with the application of professional skepticism, the expanding sources of information to be used as audit evidence, and the accuracy, completeness, relevance and reliability of audit evidence.

“Our substantially revised standard addresses the evaluation of audit evidence and has been modernized to reflect our current business environment,” said AICPA chief auditor Bob Dohrer in a statement Thursday. “It recognizes the use of automated tools and techniques such as audit data analytics, AI and remote observation tools to obtain audit evidence.”

The new standard promises to improve the auditor’s assessment of whether sufficient and appropriate audit evidence has been obtained and provides a multi-faceted consideration of attributes and factors in weighing audit evidence. 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. The institute’s technology arm has been working with audit technology provider CaseWare and a group of accounting firms on developing a Dynamic Audit Solution that promises to level the playing field with the sophisticated auditing software already in use by the Big Four firms.

“The new standard is based on the premise that the auditor should evaluate information to be used as audit evidence notwithstanding the source from which it is obtained, or the procedures used to obtain the information,” Dohrer added. “New attributes of information for the auditor to consider include, whether the information is corroborative or contradictory to management assertions, the authenticity of the evidence and its susceptibility to bias.”

SAS No. 142 takes effect for audits of financial statements for periods ending on or after Dec. 15, 2022. The standard will mainly amend AU-C section 500 of the AICPA’s Professional Standards.

The AICPA’s site, Recently Issued Auditing and Attestation Standards: Information and Resources, provides the latest information on the standard.

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