The fourth industrial revolution is reshaping the world we live and work in. This revolution presents significant opportunities for audit and assurance. The ever-growing availability of data combined with emerging technologies offer new ways for assurance professionals to enhance trust and confidence in their work.

For the audit and broader assurance profession, the emergence of new digital tools represents a real opportunity to attract a new generation of professionals to this noble profession. 

In some ways, the accounting and auditing world is catching up to the digital transformation that many industries have already experienced. Retail, hospitality, transport, entertainment, energy and many, many more have undergone disruption via new entrants and completely improved customer experience. In fact, it’s harder to think of an industry that hasn’t been disrupted by technology than one that has. If an industry hasn’t been disrupted yet, it’s only a matter of time.    

At the International Auditing and Assurance Standards Board (IAASB), we are determined to ensure that our standard-setting keeps pace and is prepared to adapt to disruptive technologies. We do so without losing our focus on setting high quality standards that strengthen public confidence in audits and assurance.

Technology is one of IAASB’s most relevant strategic drivers influencing our standards and future activities. Our technology initiative has three objectives:

1. Build processes and structures to support the IAASB’s disruption initiative;
2. Maintain and improve the IAASB’s knowledge about disruption trends and their implications for standard-setting and the public interest; and
3. Share knowledge and agenda with stakeholders in the reporting community to improve audit and assurance quality and thereby improve reporting quality.

Staying close to new technological developments is key to understanding what’s coming and in 2020 we carried out a research study with support from Founders Intelligence, a leading technology consultancy, to identify the leading disruptive technologies that could impact audit and assurance.

This research included investigating over 100 technology innovator companies and interviewing over 20 organizations across the industry including audit and assurance practitioners, national standard setters, regulators, and professional accounting organizations as well as founders and management of technology startups. We sought to categorize the various technologies we identified into those impacting the way information is accessed, verified, and protected as well as those that impact procedures related to assessing internal controls. We obtained insights into the expected timing of widescale adoption of these technologies within audit and assurance as well as gaining an understanding of their potential impact on the profession.

Based on the research undertaken, we identified four common themes about how technology is, and will continue to, disrupt the audit and assurance profession:

• Audits and assurance procedures performed on a more continuous and real time basis. 
• An audit or assurance engagement that is increasingly analytics based, including making use of artificial intelligence and machine learning in performing analytics. 
• An audit and assurance engagement that is increasingly performed remotely.
• Audit and assurance becoming a more technology-enabled profession, where more professionals can understand, use, and leverage advancements in technology in their day-to-day work.

The IAASB discussed these findings from this research in January 2021. We held two roundtables, in November 2020 and February 2022, where the innovators behind selected technologies were invited to share more about the technology and to answer questions about it from participants representing the global audit and assurance ecosystem.

Our focus did not stop there. We continue to commit dedicated resources to carry on this research and maintain the horizon watch for disruptive technologies that might impact audit and assurance.

We are upskilling IAASB members and staff to ensure we obtain a good understanding of the technologies that have the potential to disrupt audit and assurance and can factor these considerations into our current and future workplan activities.

Our bi-monthly Market Scan publication focuses on a different technology and presents a high-level understanding as well as technology trends, industry and startup driven innovation in audit and assurance and what it might mean for the IAASB.

We are committed to building processes and structures to stay informed about technology and potential disruptions. To this end we have set up a Digital Advisory Group made up of a small number of innovators and business leaders to help influence the IAASB’s thinking about the technology environment, different technologies and how those technologies may require standard setters, including the IAASB, to act. 

This group, comprised mostly of experts from outside the audit and assurance profession, will be asked to comment on technology and innovation topics related to assurance and to bring valuable points of view that may differ from the IAASB’s usual stakeholder outreach. The intelligence obtained from this group will be used to update the IAASB’s research to date and focus other information gathering activities.

Over the coming years, we will translate these lessons into real standard-setting inputs. In our ongoing work on audit evidence, fraud, and going concern, the IAASB will account for the impact of new technologies. Going forward, we will need to think about whether the use of the technology becomes the norm in fulfilling audit and assurance requirements and how that will impact our thinking on the scalability of our standards.

We know from our outreach activities that many national standard setters, regulators, audit firms and professional accounting organizations are similarly committing resources and effort into determining what the impact of technology will mean for auditing standards and for our profession. This is encouraging and crucial. All players in the industry have a responsibility to upskill themselves, engage in the conversations about technology disruption and share their experiences as well as the challenges they are encountering. It is only through our collective commitment to digital transformation that we will be able to move forward as a profession and continue to fulfil the valuable societal role that is our guiding purpose as well as creating an exciting future for our professionals.

This article was originally published in The Chartered Accounant, published by the Instittue of Chartered Accountants of India.

With global assets in sustainability and ESG-related investment vehicles due to surpass $53 trillion by 2025, the need for reliable, neutral, and comprehensive frameworks for reporting sustainability information is evident. And policymakers and regulatory bodies have taken note. The European Union (EU) continues to negotiate terms for its Corporate Sustainability Reporting Directive. This past March, the U.S. Securities and Exchange Commission proposed new rules regarding disclosure of climate-related risks. The newly formed International Sustainability Standards Board (ISSB), which has support of the G20 and others, issued their exposure drafts for sustainability reporting for public comment. The International Organization of Securities Commissions and Financial Stability Board weighed in on climate-related disclosures as well.

As a result, we face a critical moment: the growing desire globally to develop reliable, high-quality sustainability reporting as a key element of corporate reporting is leading to new requirements and heightened expectations. This will be a journey, and some level of patience is needed. The data capture, information systems, and processes within many organizations needed to report reliably on sustainability are, understandably, in the process of maturing.

Like in the world of financial reporting, external assurance has a key role in contributing to reporting reliability. Supporting investors and regulators’ trust in the sustainability information reported is the goal. Robust assurance standards that offer a consistent approach across borders for opining on organizations’ sustainability reports should facilitate that goal.

We at the International Audit Assurance and Standards Board (IAASB) hear the need for a global assurance standards solution. The IAASB already has well-established principles-based and subject-specific standards and guidance that are being effectively applied. But we know there is further work to be done in bringing the existing standards and guidance together and supplementing them to address assurance of sustainability reporting specifically.

We’ve recently taken a big step forward; our March 2022 meeting provided our first opportunity to discuss the IAASB’s actions in responding to the urgent need for an international assurance framework for sustainability reporting. In the discussion, the IAASB heard directly from investors that the reliability of sustainability reporting is crucial for decision making. The need for urgent and effective action, which balances global consistency and flexibility to accommodate regional variations, was clear.

The IAASB is committed to leading this effort to create new “sustainability bespoke” assurance standards. We are now in the process of identifying the specific approach to building these standards that will have the greatest impact on establishing high-quality assurance to support reliable sustainability reporting. We have determined that the new sustainability assurance standards will need to be framework-agnostic and principles-based—they will need to work with all sustainability/ESG reporting frameworks. We also expect that the sustainability assurance standards will need to be developed in a phased approach. Initial actions shall focus on an overarching standard that addresses all areas of the engagement in principle, with specificity provided on key areas. Specificity across non-key areas of the assurance engagement will develop over a longer time horizon, factoring in the maturity and evolution of sustainability reporting and assurance.

We will be discussing the approach to standard-setting on sustainability assurance at our IAASB meeting next week. The IAASB is hoping to have the proposed new sustainability assurance standards ready for public comment during the second half of 2023. Moving at this speed is possible in part because the current International Standards on Assurance Engagements (ISAEs), together with the non-authoritative sustainability assurance guidance, provide a robust starting point. We also plan to leverage the principles embedded in our International Standards on Auditing (ISAs), which are already used in 130 countries, are well known throughout the marketplace, and are trusted by investors and regulators.

Building a mature reporting and assurance ecosystem for sustainability will not happen overnight. The evolution of the ISAs, for example, has been an iterative affair since the 1970s. The process will—and should—take time. Nevertheless, to make progress, we cannot let perfect be the enemy of the good. Over time, as preparers, auditors, regulators, and investors gain experience, we can expect reporting frameworks and assurance standards to become increasingly refined, just as financial standards have evolved.

To continue to make progress, all stakeholders will need to remain in close collaboration. This will enable us to move quickly and boldly where and when we can. We expect a rapid transformation to occur in this space over the next decade. From there, global sustainability standards, like global financial audit standards, will be a stable platform, and our focus will on almost certainly be on continuous improvement.

Reliable checks on companies' sustainability credentials will take years to develop, auditors say, meaning investors pouring trillions of dollars into green funds remain at greater risk of being hoodwinked.

Given the demand for investments that support environmental, social and governance (ESG) goals, the pressure is on to ensure companies aren't exaggerating or misrepresenting the benefits of their activities, a phenomenon known as "greenwashing".

Read the full article on the Reuters website.

As part of the ACCA's virtual conference, IAASB Chair Tom Seidenstein speaks with IAASB Member Chun Wee Chiew in a two-part conversation about Tom's first two years as chair and key projects and priorities for the IAASB.

The IAASB’s work continues apace despite the pandemic, with chair Tom Seidenstein now focused firmly on the future

Two years into his term as chair of the International Audit and Assurance Standards Board (IAASB), Tom Seidenstein is focusing on future developments, not least the creation of a standard covering less complex entities.

As is widely recognised, auditing standards have evolved to mirror an increasingly complex business world, and yet there remain many businesses and other organisations that arguably do not require such a detailed examination. But, as Seidenstein is keen to point out, this is not about lowering the quality of audit for less complex businesses; it is about auditing in a smarter way.

Read the full article on the AB Magazine website: Pushing for Smarter Auditing

Having taken the helm of the International Auditing and Assurance Standards Board (IAASB) in July 2019, Tom Seidenstein recognises the challenges posed by the loss of trust in audit quality and the intense scrutiny the profession is experiencing. He intends to respond by embracing innovation while maintaining high-quality standard-setting.

Unlike his predecessor, Professor Arnold Schilder, Seidenstein isn’t a member of the audit profession. Nevertheless, he sees strong markets, high-quality standards and a high-quality profession as directly linked. ‘I believe the profession is essential to making our economies and markets work better,’ he says. ‘That will only occur if we are able to attract the best and brightest to the profession.

Read the full article on the ACCA website: Innovation, Collaboration and Agility

Momentum is gathering for increased sustainability/environmental, social, and governance (ESG) reporting requirements for companies. Investors, policymakers, and a broad range of stakeholders seek higher quality, increasingly standardized reporting on companies’ performance on non-financial measure. And with this, demand for assurance engagements that enhance the degree of confidence of the intended users of sustainability/ESG reporting is growing.

We at the International Auditing and Assurance Standards Board (IAASB), the independent audit and assurance standard setter serving more than 130 countries, expect the drive for added corporate reporting and disclosure on sustainability and climate-related information only to accelerate. We see the trend moving from voluntary reporting commitments to requirements mandated by jurisdictions throughout the world. The European Union’s proposed Corporate Sustainability Reporting Directive is an important example in that direction. The establishment of the International Sustainability Standards Board (ISSB) by our counterpart organization, the IFRS Foundation, enhances the likelihood of a trusted and independent source developing globally accepted reporting standards as the basis of requirements.

As with financial reporting, the IAASB believes that market participants are best served when financial and other reported information benefits from external assurance, provided by professionals committed to the public interest and highest ethical standards. For this reason, in the past the IAASB has devoted significant energy to creating standards to govern assurance of non-financial information. We have a well-established umbrella standard, International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information, and subject-matter specific standards such as, ISAE 3410, Assurance Engagements on Greenhouse Gas Statements. In April of this year, we published guidance aimed at helping assurance professionals apply our umbrella standard to sustainability and other non-financial (or extended external reporting) assurance engagements.

We know that our work is only the beginning, a solid foundation to build upon. This is why we committed to do more work to enhance the assurance of sustainability/ESG reporting when we approved our new 2022-2023 work plan last week.

The IAASB agreed to dedicate capacity and resources to the assurance of sustainability/ESG reporting. Information gathering and research activities, using dedicated staff resources, to determine future IAASB action will commence in January 2022. This initial work will also determine the precise scope and timing of the IAASB’s efforts. The initial work will also include a willingness to collaborate with key stakeholders throughout the world, including the standard-setting and regulatory communities.

We recognize that our initial consultations could lead to:

• Developing new subject-matter specific standard(s) that build on and supplement ISAE 3000 (Revised);
• Targeted enhancements to ISAE 3000 (Revised), as necessary; or
• Other related actions that are necessary in the public interest. For example, revising our existing guidance or developing new guidance.

Our March 2022 IAASB meeting will the first opportunity to provide feedback, share views and discuss next steps (you can listen to our discussions via YouTube).

We are conscious that demand for enhanced requirements and guidance is high; it is why we are positioning the IAASB to act in a coordinated and responsive manner. 

At its March 2021 meeting last week, the IAASB approved Non-Authoritative Guidance on Applying ISAE 3000 (Revised) to Extended External Reporting (EER) Assurance Engagements, which will be published in April. This guidance marks a significant step forward in supporting the evolving field of assurance for non-financial reporting. EER encapsulates many different forms of reporting, including, but not limited to, sustainability or ESG (environmental, social and governance) reporting, integrated reporting, reporting on corporate social responsibility, greenhouse gas statements, and service performance reporting in the public sector.

The Guidance builds on our existing, well-tested assurance standard, International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information. The Guidance responds to practitioner and user-identified challenges in the practical application of the standard to assurance engagements on EER.

Together with ISAE 3000 (Revised) and ISAE 3410, Assurance Engagements on Greenhouse Gas Statements, the Guidance forms a strong package aimed at enhancing confidence in and improving the reliability of assurance reports for their intended users. We believe this package of standards and Guidance is sufficiently robust to enable practitioners to respond to new reporting regimes, including those under consideration in the European Union and elsewhere. However, as gaps emerge, the IAASB remains ready to act.

Benefitting from our due process, the approval of the Guidance completes the work that we commenced in 2017 with the support of the World Business Council for Sustainable Development (WBCSD).

The Guidance Addresses Growing Demands for Extended External Reporting & Non-Financial Information Reporting

Non-financial information has become an important topic in reporting circles. As reporting evolves, auditors are increasingly asked to provide assurance on sustainability or ESG reporting. Where this type of reporting, and assurance thereon, have often been undertaken on a voluntary basis by entities, there is an increasing (and nowadays, urgent) focus on this being mandated by law or regulation. We at the IAASB have taken the view that we must rise to the challenge and assist, particularly as users of corporate reports are demanding a broader base of information to inform capital allocation decisions.

The Guidance responds to ten key stakeholder-identified challenges commonly encountered in applying ISAE 3000 (Revised), the umbrella standard for assurance engagements, in EER assurance engagements.

In response to strong requests from stakeholders, the Guidance also provides further explanation and examples to facilitate a better understanding of the distinction between limited assurance and reasonable assurance engagements as contemplated in ISAE 3000 (Revised).

Some may wonder why we chose the term “Extended External Reporting (EER)” rather than ESG or other forms of reporting now in common parlance. We chose EER to ensure broad-based impact of the Guidance. ISAE 3000 (Revised) applies to any assurance engagement other than an audit or review of historical financial information, including different forms of reporting of non-financial information as I have highlighted at the start.

EER information may be presented as a section(s) in an entity’s annual report or other mainstream periodic report, or in a regulatory filing, or it may be presented as a separate report(s) or statement(s) issued by an entity. Similarly, when an assurance engagement is requested, the EER information subject to assurance may be the whole report or may be one or more metric(s), section(s) or statement(s) within a report. ISAE 3000 (Revised) and the Guidance accommodate all these variations.

EER Engagements Must Include a Commitment to Quality and the Highest Ethical Standards

The Guidance supports the application of ISAE 3000 (Revised), which is the IAASB’s authoritative pronouncement. The Guidance does not introduce any further requirements beyond those in the standard or override or change any of the requirements or application material in the standard. Importantly, requirements related to quality and ethics are already deeply embedded in the standard.

ISAE 3000 (Revised) requires that:

• The practitioner is a member of a firm that is subject to International Standard on Quality Control 1, or other professional requirements or legal or regulatory requirements that are at least as demanding. This requirement will be updated and aligned with our new and revised quality management standards that were issued in December 2020.
• The practitioner and members of the engagement team are subject to the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants or other professional requirements or legal or regulatory requirements that are at least as demanding.
• The practitioner complies with the requirements of the standard addressing their own competence (including assurance skills and techniques) and the competence of others who perform the engagement.

Ensuring the Right Conditions Exist

The practitioner is only permitted to accept or continue an assurance engagement in accordance with ISAE 3000 (Revised) when the preconditions for an assurance engagement are present. Such preconditions relate to, among other matters, whether the engagement has a rational purpose taking into account, for example, the needs of users of the subject matter information, and the suitability of the criteria applied in the preparation of the information (e.g., a reporting framework or set of reporting standards that satisfies the requirements of the standard).

A significant part of the Guidance is devoted to supporting practitioners as they navigate the requirements of ISAE 3000 (Revised) relating to determining whether the preconditions are present.

The current global developments to establish a coherent set of sustainability reporting standards also will go a long way to address the preconditions for assurance engagements by providing suitable criteria.

Additional Support Material

We received considerable encouragement from respondents to our public consultation on the Guidance, which was accompanied by two supplements, to advance the development of certain elements of the supplements for publication; in particular, the supplement that provides longer worked examples relating to EER assurance engagements. Therefore, two additional items of non-authoritative support material will be published at the same time as the Guidance (note, these are not integral to the Guidance; the Guidance can be used without the need to refer to these materials, but they are available as additional resources, should practitioners wish to refer to them): (1) Credibility and Trust Model Relating to EER Reporting, and (2) Illustrative Examples of Selected Aspects of EER Assurance Engagements. The latter includes examples that cover a broad range of reporting frameworks.

What Lies Ahead

Together with ISAE 3000 (Revised) and ISAE 3410, the Guidance provides a solid foundation for consistent performance of quality assurance engagements relating to non-financial information reporting. At the same time, we know that this will not be our last action in this rapidly evolving area.

The IAASB is prepared to act to enhance our standards, frameworks and guidance to support progress. We will closely monitor relevant developments, engage with our stakeholders as part of our outreach program and seek a place at the table involving policy discussions that may impact our standards and our role as global auditing and assurance standard setter.

Following a vote by the IAASB during the last day of the September meeting, IAASB Chair Tom Seidenstein explains why the new quality management standards respond to:

• The changing environment;
• Challenge the effectiveness of the IAASB’s pre-existing quality control standards; and
• Growing market participant needs.

The resulting suite of standards are aimed at a more robust system of quality management for firms using the IAASB’s standards, and marks an evolution from a traditional, more linear approach to quality control.

     Read the Article on LinkedIn     

In an IESBA "Message from the Chair", IESBA Chair Gabriela Figueiredo Dias discusses the key points of the March 2026 IESBA Meeting in New York.