Baruch/CPT Speakers View Data Analytics

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State Board Report

December

A year ago the PCAOB began an information outreach consistent with what other regulators are considering and there is nothing that researchers have seen that would act as an impediment to using data analytics for audits, Patrick McNamee, Deputy Chief Auditor of the PCAOB told the Baruch/CPT conference. He said the PCAOB recognizes it needs to be flexible to understand what is happening and how the information is being used.

While data analytics is being used for risk assessment, six months ago it was still in the early stage of being used for evidence, Mr. McNamee reported. He noted that CPA Canada did a survey in October on how firms are using data analytics. They found the smaller firms are using data analytics as evidence, but the larger ones are using it only as supplementary evidence. The PCAOB’s outreach found firms still have much to learn about what data analytics means.

Miklos Vasarhelyi, Professor of AIS at Rutgers Business School, advised the conference attendees to check You Tube, free-of-charge, to learn about data analytics information developed by his university. Dr. Vasarhelyi, who spoke at NASBA’s 2017 Western Regional Meeting, has been working with the AICPA and the large CPA firms on a three-part project to understand large populations, process the findings and use visualization as audit evidence. His group is creating projects to automate pieces of the audit process.

“Investors do not complain of information overload,” remarked Mohini Singh, Director of Financial Reporting Policy for the CFA Institute. While they do not want to see boilerplate statements, they don’t mind going through redundant material in a large report. She compared data analytics to crowd funding – seeing the need for both to have a framework to balance investor protection and opportunity. Ms. Singh referred all to the CFA Institute’s “Data Technology: Transforming the Financial Information Landscape: Investor Perspectives.”

Planning has started for NASBA’s June 2018 Regional Meetings and sessions to bring State Board regulators more information about how technology will be impacting their work are under consideration.