Today, the Securities and Exchange Commission is considering whether to approve final amendments regarding the use of technology-assisted data analysis in audit procedures. I’m pleased to approve these amendments because they would provide auditors with modernized guidance regarding use of these tools.
The existing audit standards were written in an earlier technological era and have not been updated since 2010.[1] Now, nearly a quarter into the 21st century, I’m glad the Public Company Accounting Oversight Board’s (PCAOB) has revisited its standards to address how auditors assess the quantity and quality of audit evidence when using technology-assisted analysis.
Such updates are needed, given the rapid technological changes we’re seeing throughout finance and the economy. Today, computer data analysis plays a growing role in the audit process.
First, the proposed amendments would establish a risk-based framework for auditors to determine the reliability of information in the large data sets that companies provide. This would help auditors better ensure that they are obtaining quality audit evidence.
Second, the proposed amendments provide a framework regarding the work auditors should do with respect to items that are flagged for further investigation by computer-analysis tools. These amendments would help auditors determine whether they have the quality and quantity of evidence to support their audit conclusions.
Third, today's amendments provide updates to the descriptions of the procedures auditors perform.
With the greater use by auditors of data analysis tools, today’s Amendments could help the profession in using such tools.
I thank the PCAOB for their ongoing work on this matter, and for keeping up with the rapid pace of technology in the accounting field.
I’d like to thank members of the SEC staff for their work on this proposal, including:
- Paul Munter, Natasha Guinan, Anita Doutt, Shaz Niazi, Mark Jacoby, Fariba Nasary, Keith Hooper, Taylor Pross, and Dana Cretu in the Office of the Chief Accountant.
- Megan Barbero, Bryant Morris, Peggy Kim, and Hillary Holman in the Office of the General Counsel.
- Jessica Wachter, Lauren Moore, Oliver Richard, Charles Woodworth, Lyndon Orton, Tara Bhandari, Maclean Gaulin, Olga Itenberg, Vladimir Ivanov, and Rebecca Orban in the Division of Economic and Risk Analysis.
- Ryan Wolfe and Charles Wright in the Division of Enforcement.
- Jenson Wayne, Michael Republicano, Nicolina McCarthy, and Meghan Ryan in the Division of Investment Management.
- Sarah Lowe and Stephanie Sullivan in the Division of Corporation Finance.
- Emily Russell, John Fahey, and Tim Fox in the Division of Trading and Markets.
- Vanessa Countryman, Matthew DeLesDernier, Kesha Hardin, Barbara Volpe, and Crystal Wilson in the Office of the Secretary.
[1] See Public Company Accounting Oversight Board, “Amendments Related to Aspects of Designing and Performing Audit Procedures that Involve Technology-Assisted Analysis of Information in Electronic Form,” (June 2024), available at https://assets.pcaobus.org/pcaob-dev/docs/default-source/rulemaking/docket-052/2024-007-adoptingrelease.pdf?sfvrsn=28f44e9e_2.
