FRC: UK audit firms can do more to support roll-out of leading-edge data analytic techniques
30 January 2017
According to findings from a review carried out by the FRC, UK audit firms are at the forefront of developing and using data analytic techniques with the potential to improve audit quality. A more structured approach to their deployment could accelerate their effective use.
The Use of Data Analytics in the Audit of Financial Statements thematic review identified that the use of data analytic techniques is not yet widespread and gives examples of good practice identified during the course of FRC audit inspections.
Examples include:
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enabling audit staff to build experience and confidence in using a specific audit data analytics tool through a structured roll-out programme.
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using data analytics for the first time at an interim audit date to improve the prospect of obtaining robust audit evidence at the financial year end, particularly in a first year audit.
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improving the effectiveness and efficiency of the extraction of entity data into audit data analytics tools by using dedicated specialist staff and/or dedicated software.
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using data analytic techniques to improve oversight and consistency of multiple auditors contributing to group audit audits where organisations have global accounting systems.
Melanie McLaren, Executive Director for Audit and Actuarial Regulation, said,
“The FRC promotes continuous improvement in UK audit. Competition on grounds of quality and innovation has increased since the introduction of audit tendering. UK audit firms are at the forefront globally of developing data analytic techniques with the potential to improve audit quality. In reporting on our thematic review of their use in practice, the FRC hopes to accelerate effective usage for the ultimate benefit of those who rely on UK audit.”
Full press release
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