The use of audit data analytics (ADAs) is an important advancement in audit innovation. Learn about CPA Canada’s recent initiative on the use of ADAs in Canada.
CPA Canada’s Audit Data Analytics Committee has undertaken an initiative to obtain and communicate insights from external auditors who have started to use Audit Data Analytics (ADAs). Auditors who have not yet started to use ADAs may benefit from, and be encouraged by, the experiences of those auditors who have already taken this important first step.
The initiative involved CPA Canada holding a series of interviews with engagements teams from nine participating public accounting firms ranging in size from very small to very large to discuss the use of data analytics on specific audit files. The primary objective was to empower auditors to plan and integrate the use of ADAs into their audits. To achieve this objective, efforts have been made to:
- obtain and communicate information on why and how some auditors in Canada are using ADAs in their financial statement audits and the results of such use
- identify and make auditors aware of important matters to consider in deciding the nature, timing and extent of their use of ADAs going forward
- build on previous initiatives undertaken by CPA Canada regarding the use of ADAs
Based on the results of this initiative, the use of ADAs is not yet widespread. However, firms and practitioners are obtaining the skills needed to perform ADAs and building advanced ADAs that can execute enhanced risk assessments and carry out substantive procedures. The real challenge remains in extracting the data – both the right data for the ADA and in the right format for the tool being used. This is further complicated when an entity has more than one enterprise resource planning (ERP) system or a customized ERP system. Time and effort are required by both the auditor and members of entity management to progress the use of ADAs.