Addressing exceptions in the use of ADA (audit data analytics)

25 October 2021
Auditing and Assurance
South African Accounting Academy

In this guidance, general principles are laid out for dealing with outliers when using ADA to respond to identified risks in an audit, a potential approach auditors could take and included an illustrative example based on a real-world scenario. The FRC has also included best practice, and potential pitfalls to avoid, when refining expectations developed for ADA to assist auditors in undertaking this process effectively. Additionally, we have provided a non-exhaustive list of considerations that auditors may wish to take account of before making use of ADA in the evidence collection stage of the audit.

The focus of this guidance is on using ADA in order to respond to risks, as part of substantive testing and evidence collection, rather than on assessing the risk of material misstatement at the planning stage of an audit, for example in journals testing where the use of analytics is now relatively commonplace, and approaches are more established.

Finally, although some of the principles may be applicable, this is not intended as a guide to making use of ADA in the testing of controls.

Click here to download the Guidance document:

https://www.frc.org.uk/getattachment/01327ab3-1d5f-4068-ab9b-ece0efc3c3af/Addressing-Exceptions-In-The-Use-of-Data-Analytics-20210824.pdf

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