Page 32 - Inspection Report 2018

Chart 6
Common pitfalls and best practices in the application of dA

Common pitfalls Best practices

• Application of the DA tools did not • Involvement of the audit firm’s information
satisfy the specific requirements of technology (IT) specialist to verify the
ISA 330 The Auditor’s Responses to integrity and reliability of the PIE’s
Assessed Risks, particularly whether information system. The IT team were
substantive procedures were also involved in the data extraction from
performed for each material class of the PIE’s information system to ensure
transactions, account balance, and completeness and accuracy of system
disclosure information

• Exceptional or unusual transactions • Extensive training sessions on the audit
identified by dA were not sufficiently firm’s dA resources and relevant application
investigated of such tools in the performance of audit

• Inconsistent application and • Dedicated audit firm personnel as ‘subject
understanding of the audit firm’s dA matter experts’ on the implementation and
tools and methodology, particularly use of dA
where overlapping methodologies
were noted

Moving forward

• As audit firms start to extend the usage of DA, in-depth scrutiny and evaluation over the audit
firm’s application of DA should be performed to ensure that all requirements of the auditing
standards have been met;

• Enhancement to the audit firm’s methodology and corresponding training sessions to provide
clarity and consistency in the application of DA in the audit of financial statements; and

• Adoption and application of DA should be considered by Other Audit Firms especially where
efficient use of technology can help bridge the gap arising from human resource constraints.

AUDIT OVERSIGHT BOARD
30 ANNUAL INSPECTION REPORT 2018

83806_Inside_NEW.indd 30 5/28/19 3:02 PM