December 17, 2020
The Financial Reporting Council (FRC) has today published its response to its recent consultation, Technological Resources: Using Technology to enhance audit quality. The FRC’s response incorporates discussion of responses received as well as discussion of other matters that have arisen throughout additional outreach and engagement with stakeholders.
Almost all respondents agreed that the use of technology could significantly improve audit quality, when deployed at the right time in the audit process and, crucially, by those with the right training. Respondents also agreed that, whilst additional application material and guidance would be beneficial, the current assurance model and audit standards do not represent a significant impediment to the development and deployment of technology in audit.
Training and skillset were identified as many respondents’ primary concerns. A significant majority of respondents saw the recruitment of staff members with the right skillsets alongside the development of appropriate training for current staff (both trainees and experienced), as a priority.
Where a consensus around a specific action that the FRC can take to address concerns has been identified, or where the FRC has determined that no action is currently necessary, this has been laid that out within the individual sections of the paper.
Given the almost constantly evolving landscape in this area, conversations about the relationship between technology and audit are on-going. The FRC’s response captures current thinking on the present and future of technology in audit, but further discussion is still required in many areas.
This response will serve as a foundation for discussions about the role of the regulator in relation to the use of technological recourse in audit, be that enhancing relevant standards, influencing international standard setters, developing guidance on select topics or clearly communicating expectations regarding the use of technology.