IAASB’s Technology Working Group publishes non-authoritative support material related to technology: Audit documentation when using automated tools and techniques
The Technology Working Group (TWG) of the International Auditing and Assurance Standards Board (IAASB) has published non-authoritative support material related to technology: Audit documentation when using automated tools and techniques. The publication does not amend or override the International Standard on Quality Control (ISQC) 1 or International Standards on Auditing (ISAs), the texts of which alone are authoritative.
The publication highlights that while the documentation requirements of the International Standards on Auditing (ISAs) are the same for manual and automated tools and techniques, the use of automated tools and techniques (AAT) during an audit engagement may result in different documentation considerations when compared to manual tools or techniques.
The publication focusses on selected paragraphs of ISA 230 Audit Documentation and how the use of ATT by an auditor may affect, if at all, the auditor’s documentation, and other special considerations for the auditor. The key features of the publication are as follows:
Results of audit procedures performed
The publication provides examples of how there may be different documentation considerations due to the different nature of the tools being applied. When using ATT for the purposes of analysing an entire data set, the auditor is required to document the results of the analysis for the data set. This could be achieved by visualisation of the results or may be achieved by documenting that for every item tested, the analysis that was performed to test a certain matter.
In some situations, the extent to which documentation is required may increase where ATT is used, compared to if the auditor chose to use sampling techniques. In documenting such analysis, the auditor may use ATT to quantify such exceptions and if needed, export results of the analysis to a format or document type e.g. a spreadsheet that is suitable to be included in the auditor’s engagement file.
Significant matters arising during the audit
Performing a procedure through the use of ATT or by manual means does not affect the documentation of a significant matter but the use of different tools and techniques may result in different significant matters being identified. Regardless, the auditor is required to document their conclusions and the significant professional judgements made. When using ATT, the nature of significant professional judgements may differ from those encountered when performing manual tools and techniques. For example, where use is being made of a drone and AI enabled image analysis for purposes of performing inventory test counts and analysing the results, the documentation may need to include the steps taken to ensure the best view of items being counted and how the AI was deemed appropriate for analysing the images. This is in contrast to where the test counts are performed by a member of the audit engagement team where the training received by the individual to visually count the inventory at the stocktake is unlikely to be documented on the audit engagement file (little professional judgement involved).
Form, content and extent of documentation
When using ATT to perform audit procedures, the following aspects may also be appropriate in considering the form, content and extent of audit documentation:
- The name of the automated tool used, and a description of the source data used in the analysis.
- Details of the data capture, data extraction and delivery process, and validation and reconciliation procedures performed by the auditor.
- If the ATT allows the auditor to drill down through the information being analysed to identify unusual items of characteristics, documentation around the filters/segments applied and the path of thought process followed.
- Nature of the procedures performed and the resulting visualisation or table of contents of the analysis.
- The involvement of third-party service providers to carry out data extraction services, and how the data was determined to be accurate and complete.
One of the unique characteristics of using ATT is that many different iterations of procedures performed on the data can be viewed. The auditor may choose to include different visualisations, results of applying different filters, or iterations of algorithms, when, in the auditor’s judgement, these assist in understanding the nature, timing and extent of audit procedures performed and the results obtained.
The publication also covers how the firm’s approval of technological resources may affect the auditor’s documentation.
