Comment Letter

IAASB Audit Evidence Comment Letter

Friday, April 21, 2023

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In this comment letter, the CAQ provides views to the IAASB related to its request for comment on its Proposed International Standard on Auditing 500 (Revised) Audit Evidence and Proposed Conforming and Consequential Amendments to Other ISAs. 

The CAQ supports the Board’s stated objectives in the Exposure Draft and the key public interest issues the Board seeks to address through the proposed changes. Specifically, we support the Board’s goal to develop a principles-based approach for making judgments about information intended to be used as audit evidence.  

Auditors use professional judgment when evaluating information to be used as audit evidence. The ways auditors evaluate information through the use of technology and automated tools and techniques is evolving. To ensure the Board develops an ISA that stands the test of time, it is key that the final ISA 500(R) be sufficiently principles-based. We support the focus on the appropriateness of audit evidence in the circumstances rather than the categorization of such audit evidence. We believe that focusing on the overall persuasiveness of audit evidence, regardless of procedure type, will facilitate the auditor’s adoption of the final ISA 500(R) and support continued innovation in the audit.    

Overarchingly, we have two primary concerns as follows: 

  • Elements in the Explanatory Memorandum are not sufficiently incorporated into ED-500 
    The requirements, application material, and appendices when read in combination with the Explanatory Memorandum provide a fulsome picture of the Board’s intent for the final ISA 500(R). It would be beneficial to include certain elements of the Explanatory Memorandum in the final requirements and application material to support the consistent interpretation and adoption of the final ISA 500(R). 
  • ED-500 could go further to accommodate the use of technology
    The impact of technology is a key strategic driver in the IAASB’s current Proposed Strategy and Work Plan for 2024-2027. To fully realize the potential benefits that technology can have on enhancing audit quality, we believe the final ISA 500(R) could go further to accommodate the use of technology in the audit. While it is important to maintain a balanced standard that does not require the use of technology, the ED-500 does more to suggest factors an auditor considers which may dissuade them from using technology (e.g., automation bias considerations) than it does to facilitate the use of technology.

Read the full comment letter.