Prepare for the era of big data Audit!

The audit community has begun to consider how to make use of large data in audit work and whether it is necessary to invest heavily in purchasing cutting-edge data analysis tools, with a view to greatly expanding the ability of external auditors to excavate business books and records.

However, in the process of advancing to the next audit era, we have encountered increasingly complex regulatory and legal provisions that could lead to a standstill in the transition process.

From the perspective of future audit, the listed companies should give auditors more access, no longer limited to the transaction samples, but extended to all the general ledger and database. "With these tools, auditors can look at the underlying data, not just the summary data," said Brian ˙, Confirmation.com's president of the audit services company. They want to get all the trading data, even if the deal may involve millions of or even tens of thousands of records. In this way, the audit will face a different situation. ”

But don't expect this transition to be done overnight. Forensic strategic FX, the auditor's firm, uses data analysis tools to investigate, and its shareholder, Kelly ˙ Todd, points out that outside auditors have been slower than others in the torrent of large data. The traditional audit method is based on the transaction sampling, and it is a great leap to the audit method that the traditional audit method can be reviewed in theory. Todd said: "The essence of the new audit method is data analysis, you will be able to check all transactions, so as to detect misconduct, exceptions and any other unreasonable matters of clues." ”

As analytical technology matures, accounting firms are accusations by regulators and capital markets for auditing quality, all of which force external auditors to turn to big data to find a solution. John Verver, vice president of audit technology, ˙ Wal, said: "Almost all of the ' big Four ' accounting firms and other accounting firms have big moves that use technology to improve the effectiveness of the external audit process and focus on auditing quality, reducing risk, increasing efficiency and effectiveness." ”

ASEC ˙ (Dorsey Baskin), a member of the managing partner of CPA firms and the Executive Committee on Forensic Services of the United States Institute of Certified Public Accountants, said that the auditor had a long history of traceability in the use of analytical procedures to conduct audits. The current auditing standards require the auditor to use analytical procedures to develop an audit plan, complete the audit business or perform a "scent test" at the end of the audit process. Today, the data-analysis tools The firm is examining are much more complex than ever. "The current audit toolkit seems to be no different from 50 or 60 years ago," he said. If we were doctors, that would look terrible. The audit tool still has great potential to tap, but it is still in its infancy and we are in the process of research and exploration. ”

Deloitte, for example, says they are studying the possibility of using audit tools in three different ways. Joseph Ucuzoglu, a Deloitte national management partner, Yukuzuglo that the first way is to audit a large or complete set of data, rather than just data samples, and the second way is to use artificial intelligence to search for data and text, to look for dangerous signals and to ˙ the truth; A third way is to broaden the scope of the data review and review the available data from other sources, outside of the company's data.

Yukuzuglo revealed that Deloitte is embarking on a series of pilot projects and testing them on a small scale to ensure technical viability. "We are still using the traditional audit technology, but once the new technology is validated, we will adopt it on a larger scale," he said. "Technology can not replace the manual audit, but can reduce the simple duplication of work, review more data, to provide auditors with better reference information." "These new technologies will liberate professionals and allow them to spend their time in areas where they can generate the most benefits," he said. "Auditors are attracting and retaining young talent through a variety of ways and channels, and the technology outlook does make them feel unusually excited," he said.

Auditors are gearing up to try to complete the transition in a variety of ways, the most important of which is acquiring consulting firms with technical and analytical skills. But the US public company's accounting oversight Board (PCAOB), worried that the return of accounting firms to the consulting industry would undermine the independence of its audit business, said it would pay close attention.

The concerns of regulators

In recent days, Lewis Ferguson, the PCAOB commissioner, said regulators were very concerned about the economic model of accounting firms (audit revenues were basically flat, the real growth was advisory services) and whether the model would jeopardize audit quality. "Part of the reason for the takeover frenzy is because these companies have analytical skills," he said. In this regard, I can understand why accounting firms are eager to make such acquisitions, but the problem is that their acquisitions are not limited to that. "Auditors believe that, for audit purposes, they also need to invest in technical and analytical capabilities." This explanation is reasonable, and Ferguson agrees. "This could fundamentally change the way we audit and make the audit work better," he says. ”

Ferguson noted that another issue of concern to regulators was whether audit guidelines needed to be revised to promote the adoption of advanced technologies that would make traditional sampling techniques redundant and obsolete. "We have to make sure that our guidelines do not force auditors to perform jobs that are no longer relevant," he said. ”

The auditors are also concerned about the issue, he said: "The guidelines are based on industry practice 50 years ago, i.e. sampling rather than checking all transactions." "Therefore, even if the auditor can check all transactions, these guidelines still require sampling, resulting in unnecessary duplication and inefficiency." PCAOB still requires the auditor to test the integrity and accuracy of any database used to obtain audit evidence when performing the inspection process. If auditors take advantage of the data available from outside markets in their analytical work, they cannot test these databases.

"One of the obstacles is that each audit business team must develop its own audit plan, obtain customer information, understand the internal relationships and specific content of the data, and then analyze it," he said. If there are data standards available for reference, we can obtain data in the standard format, which is more efficient and attractive to auditors. He says AICPA's asec is exploring how to develop standards for companies to generate data in a format that facilitates data analysis. So far, the general ledger and Accounts receivable related standards have been developed.

Peter Bible, a partner at audit firm Eisneramper, believes that some auditors may be conflicted because of concerns about new litigation risks, saying: "In hindsight, for whatever reason, you are usually challenged or criticized for any mistake, Or accused of not taking action. "The auditor is entangled in the place where, for example, more detailed analysis is bound to find many small and insignificant errors, and how the auditor should respond to these errors," he said. "The Software may list a lot of anomalies that you have to investigate and get tired of," he said. ”

Still, Yukuzuglo and others are looking forward to new technology prospects, he said: "For a long time, there has been no substantial change in the way accountants perform audits." This technological change can be said to be belated. ”

Proofreading: Zhangxiaoquan

China accounting Vision 3721.html ">2014 May 16 17:43 issued, reprinted please indicate the source and author."

Original link: http://www.complianceweek.com/copy-auditing-in-the-era-of-big-data/article/346192