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An auditor may use digital information from external sources across various phases of the audit. Standards on Auditing (SAs) require an auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor's opinion. Audit evidence includes both information contained in the accounting records underlying the financial statements and information obtained from other sources, such as "information obtained from external sources".
The emergence of new technology has enabled auditors to access a wider range of external information than before. This digital information can be incorporated into the audit process, and sometimes it can be compared and matched with internal evidence. Auditors are required to evaluate the reliability and relevance of this information in their audits. An auditor may use digital information from external sources across various phases of the audit. In many cases, the auditor is also able to use internal evidence and reconcile/ map them to the external data. A few examples of cases of how electronic/digital information from external sources can be used in audits for processes related to the Balance Sheet are discussed in this story.
(Read More: An Illustrative List of Digital Information from External Source used in Audit of Profit & Loss)
Audit of the future is data-driven and technology-enabled, thereby driving higher quality audits. This is possible only with multi-disciplinary and specialised talent within the audit team. A diverse audit team could consist of data scientists, engineers, and data analysts along with a team of Chartered accountants to enable a digital audit. There is an enhanced focus on having the right blend of technical and functional skills.
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This document is prepared in with the help of "Technical Guide on Digital Assurance - January 2023 edition", issued by ICAI.
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