Technology task force to examine role of data analytics and artificial intelligence in audit work

The Public Company Accounting Oversight Board’s (PCAOB) data and technology taskforce picked data analytics and artificial intelligence as its initial topics for gauging the effect of technology on audit work, according to a staffer for the audit regulatory board.

The group plans to assess other technology topics and consider investigating them in more depth when it meets later this year, said Patrick McNamee, a deputy chief auditor, during the June 5, 2018, meeting of the PCAOB’s Standing Advisory Group (SAG) in Washington.

“The task force members have commenced a deep dive on these two topics of data analytics and artificial intelligence to be able to answer several dozen or so research questions,” McNamee said. The task force is also looking for real-world examples from auditors’ work to illustrate the two issues and the challenges they pose for complying with PCAOB guidance.

The 11-member task force held its first meeting on May 17, 2018. The research effort comes as companies and auditors are increasingly using data and technology. The PCAOB put the role of technology in audit work on its research agenda at the end of 2016, and it wants to determine if the rising use of technology creates a need to amend its standards. During the second meeting scheduled for this fall, the PCAOB staff plans to update the task force about its findings with issues like blockchain, cryptocurrencies, cloud computing, the use of drones in auditing, robotic process, automation, internal controls and continuous monitoring.

McNamee said the work by the taskforce members will help the staff determine whether the issues should be brought to the board members for action.

In the meantime, the PCAOB staff is continuing its outreach to companies and the vendors who provide the tools to help it understand whether companies’ use of technology could affect the way audits are conducted in the future.

The task force members include four SAG members: Former Financial Accounting Standards Board (FASB) Chairman Robert Herz, who is an executive-in-residence at Columbia Business School, Douglas Laine, a senior adviser at Brown Brothers Harriman & Co., Jeffrey Nuechterlein, managing partner of Nue Capital LLC and Sandra Peters, head of financial reporting policy with the Certified Financial Analyst (CFA) Institute.

Five members come from accounting firms: Brian Collins, a partner at Baker Tilly Virchow Krause LLP, Mary Grace Davenport, a partner at an international accounting firm, Jason Guthrie, a senior manager at international accounting firm, Edward Wilkins, a partner an international accounting firm and Brian Wolohan, a partner at an international accounting firm.

The task force also includes two academics: Helen Brown-Liburd, an associate professor at Rutgers Business School, and Scott Showalter, an accounting professor at North Carolina State University.

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