Audit evidence is required by auditors to determine if a company has correct information considering their financial statements.
Audit evidence is the primary support for an auditor's opinion on if there is a reasonable assurance that the company's financial statements are not materially misstated due to fraud or error.
As the field of accounting is transforming, technologies such as AI (artificial intelligence) are playing a role in audit evidence.
AI is enhancing the collection of audit evidence due to the large quantities of data that can be processed with very little error.
[9] In the substantive testing stage, audit evidence is defined as the information that the auditor needs to support the appropriation of financial statement assertions.
[3] Due to the fact that large quantities of data can be collected and condensed, auditors can use the information from AI to make more efficient decisions throughout the audit.
Additionally, AI can be programmed to find certain things such as material misstatements, and can identify these mistakes in less time than humans.
[3] Currently, many auditors that use AI are utilizing its abilities to analyze evidence efficiently, but are still depending on human judgment and professional skepticism.
Big data is an external source obtained directly by the auditor, and therefore, can increase reliability of the audit evidence.
[2] As for challenges auditors would face, one would be linking the big data with the relevant, traditional audit evidence in order to complement it.
[2] Some sources of big data may come from outlets such as news articles or social media, which could be influenced by biases and make the evidence inappropriate to use as representative of the population.
Audit data analytics can also provide the auditor with a greater understanding of the evidence, leading to more informed decisions.
[4] This process performed in the first year will require extra time added to the traditional audit, so it may initially take longer than sampling.
Traditionally, bank confirmations, analytical procedures, and journal entry testing would most likely be carried out at the client site by the audit team itself.
[13] With the use of this technology, these kinds of procedures could be handed off to other groups to be completed remotely (specialists, third parties) rather than having to personally travel to the sites.