The role of data analytics in the audit is growing, and the American Institute of Certified Public Accountants is looking to drive it even further.
The AICPA has teamed up with Rutgers Business School to form a data analytics research initiative to demonstrate through research how the use of data analytics can advance the public accounting profession and to facilitate the further integration of data analytics into the audit process.
“We have two shared goals,” said Miklos Vasarhelyi, professor at Rutgers and director of its Accounting Research Center and Continuous Auditing & Reporting Lab, in a statement. “The first is to examine how audit objectives might be achieved more effectively by further integrating data analytics and related technologies into everyday practice. The second is active engagement by firms and universities in fundamental applied research for continuous improvement of the auditing profession.”
The initiative will take up research that will focus on the potential for further integration of analytics into the audit process at a foundational level in an effort to enhance audit quality, the AICPA and Rutgers said. Research will target the testing of theory and methodology that might help inform the development of guidance to the accounting profession on how to apply data analytics to the audit.
The audit profession has slowly been integrating more use of data analytics and other technology tools into the audit process to achieve a greater level of precision in the assurance provided by an audit. Some audit experts say the profession can eventually achieve continuous auditing or the audit of entire populations of data rather than random samples by adopting more use of technology.
The Public Company Accounting Oversight Board is driving indirectly some of the push toward more use of technology with harsh messages through inspection results that auditors need to provide a more precise level of assurance, especially with respect to internal control over financial reporting. Members of the PCAOB say they are watching technological developments in the audit process with great interest, expecting technology to transfer the audit process over the next few years.
The AICPA/Rutgers research initiative will look at how the audit profession is leveraging technology and electronic information currently and how it can do so more effectively in the future, said Susan Coffey, senior vice president at the AICPA. “The Initiative will play an essential role in this evolution by testing the effectiveness of new approaches and techniques in a research environment,” she said in a statement. “These findings will inform the development of AICPA guidance on audit data analytics, paving the way for implementation by CPA firms of all sizes.”