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July 2019 blog

This quarterly blog looks at what’s new and what’s coming up in the world of international auditing and assurance.

IAASB is in the thick of a number of technically difficult projects. On the agenda for its June meeting was ISA 315, which was originally scheduled for approval this time, but still seems far from that. The group audits project we reported on in April's blog is only just getting under way, as is the audit evidence project. Phase 2 of the mammoth extended forms of external reporting (EER) project was also discussed and seems to be moving forward as planned, but only the agreed-upon procedures project seems reasonably close to finalisation.

The audit evidence project is starting to highlight flaws and fault lines in how we think about an audit and what we are really trying to do when we say we have 'sufficient, appropriate, audit evidence'. The auditing standards of today were developed at a time when sampling and reliance on internal controls were the only practical way to conduct a large audit. Data analytics and other tools have changed this and allow us to test full populations, but it is not simply a case of taking a very large sample and reducing sampling risk to zero. What data analytics represents is far from a simple linear extension of what we do now, and there are profound implications in terms of how we think about the role of internal controls.