AICPA proposes to update standard for audit evidence to embrace new technologies

The American Institute of CPAs’ Auditing Standards Board has issued a proposed standard on audit evidence to update an older standard and include new technologies such as data analytics and blockchain.

AICPA building in Durham, N.C.

The proposed Statement on Auditing Standards (SAS), Audit Evidence, would supersede the existing SAS No. 122, Statements on Auditing Standards: Clarification and Recodification, as amended, section 500, Audit Evidence, along with amending several other AU-C sections in the AICPA Professional Standards.

The proposal deals with some of the newer technologies and issues that have arisen since the older standard was issued. That includes the use of information as audit evidence when emerging technologies are used by preparers and auditors (for example, audit data analytics and use of blockchain); the application of professional skepticism; the expanding sources of information to be used as audit evidence; and more broadly, the accuracy, completeness, relevance and reliability of audit evidence..

It includes a recommendation to shift the focus of the standard, including its objective, to concentrate on helping auditors determine whether sufficient and appropriate audit evidence has been obtained when the information is received from sources that haven’t been available in the past. Auditors would be able to consider a multidimensional set of attributes and factors in evaluating audit evidence obtained from any source, no matter how the auditor acquired the information, including the use of automated tools and techniques.

“Given the rapid evolution of audit evidence sources that are available today, it is critically important that auditors have a robust, durable set of attributes that allows them to make consistent assessments about the sufficiency and appropriateness of audit evidence obtained,”said AICPA Chief Auditor Robert Dohrer in a statement last week. “This proposed SAS modernizes our standards to recognize the sources of information and the technologies that were not available to auditors when the standard was last updated.”

More information, including an explanatory memorandum, can be found here. The AICPA is asking for feedback on the proposal by Sept. 18, 2019.

Separately, the AICPA’s Accounting and Review Services Committee also issued an exposure draft last week of a proposed Statement on Standards for Accounting and Review Services (SSARS) Materiality in a Review of Financial Statements, Adverse Conclusions, and Special Purpose Frameworks to amend AR-C sections 60, 70, 80, and 90 in AICPA Professional Standards. The proposal further converges AR-C section 90, Review of Financial Statements, with International Standard for Review Engagements 2400 (Revised), Engagements to Review Historical Financial Statements. The committee wants to converge the SSARS literature with ISRE 2400 (Revised) to facilitate an accountant’s ability to perform and report on engagements and lessen any confusion about the level of assurance obtained in accordance with either set of standards. Even though there are some important differences between an audit engagement and an engagement performed in accordance with SSARSs, some of the concepts, such as materiality, are consistent no matter what level of services is performed on the financial statements. The exposure draft aims to better align those concepts in the SSARSs. More information, including an explanatory memorandum, can be found here.

“SSARSs are widely used by practitioners in the United States and these proposed amendments align our standards with those used globally,” said Dohrer.

The AICPA is asking for feedback by Sept. 20, 2019.

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