Page 31 - Inspection Report 2018

Data Analytics

Application in Financial Statements Audits by the Big-Four Audit Firms

In 2018, the AOB compiled information from the Big-Four audit firms on the application of data analytics (DA)
in financial statements audits of PIEs. The AOB noted that 3 of the Big-Four audit firms have applied DA in the
financial statements audits of 35 PIEs. This number constituted approximately 6% of the total number of PIEs
audited by the Big-Four audit firms.

As shown in Chart 3, a majority of the audit engagements where DA were applied involved PIE audit clients
operating in the consumer and industrial products industry where the transactions were voluminous.

The AOB also noted that DA were commonly used to audit journal entries, revenue and receivables on audit
engagements, as shown in Chart 4.

Chart 3 Chart 4
Industry profile of PIE audit clients where Percentage of audit engagements that
dA were applied for Big-Four audit firms had applied dA by audit areas

Journal Entry
26%
Others 29% Revenue and Receivables
(Individually less Consumer Others
than 6%) products
100
90
80 97%
70 83%
Percentage 60
50
9% 40
Telecommunications
and Media 14% 30
Industrial 20
11% products 10
Financial 11% 3%
Institutions Healthcare 0

Source: AOB Source: AOB

AUDIT OVERSIGHT BOARD
ANNUAL INSPECTION REPORT 2018 29

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