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Published byDarren Dickerson Modified over 6 years ago
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The views expressed are the personal views of the presenter and do not reflect those of the PCAOB, members of the Board, or the PCAOB staff.
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Developments in Technology and Data Analytics
PCAOB International Institute Panel Discussion December 8, 2017 Martin Baumann, Chief Auditor
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Overview Current uses of data analytics Emerging technologies
Potential impact on standards Task force Data security implications
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Definition Data analytics, when used to obtain audit evidence in a financial statement audit, is the science and art of discovering and analyzing patterns, deviations and inconsistencies, and extracting other useful information in the data underlying or related to the subject matter of an audit through analysis, modeling and visualization for the purpose of planning or performing the audit. AICPA, Audit Analytics and Continuous Audit: Looking Toward the Future
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Current Uses of Data Analytics
Risk assessments Substantive procedures
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Risk Assessment Observed uses similar to FRC Analyses are both more granular and broader (100% of a population) Deeper knowledge gained allows for more focused and targeted procedures
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Substantive Procedures
Analysis of whole population permits selections based on risk – not just random One firm asserts it analyzes 100% of an investment portfolio looking for many attributes (e.g., valuation, recent trades, liquidity, hand-pricing) and plots results on heat map
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Emerging Technologies
Artificial intelligence Contract review (e.g., software sales, leases) AI could compare an entire set of electronic documents and pull out data that identifies potential side agreements, contract modifications, and which agreements have similar provisions Blockchain Some companies are implementing blockchain into their enterprise resource planning (ERP) systems Payment processing Commodities trading Procurement and supplier management Audit implications
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Potential Impact on Standards
Research team is exploring whether changes to standards or guidance is needed Economic analysis underway Quality control considerations
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Task Force – Overview Support the work of the PCAOB research team
Provide insights on Relevant end-to-end audit processes How standards are applied Information needs of audit committees and investors Expertise needed
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Task Force – Potential Topics
Journal entry testing 100% analysis: approach to outliers and non-outliers Data analytics as alternative to sampling Data analytics and significant risks Artificial intelligence Blockchain technology
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Data Security Implications
Cybersecurity risks may create barriers to auditor use of data analytics Recent Big 4 security breach Impact on companies’ willingness to allow auditors to store their data
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