WORLD ACADEMY OF INFORMATICS AND MANAGEMENT SCIENCES
ISSN : 2278-1315
How have contingency plans been assessed or updated to
place to validate the operational consistency of the
help ensure continuity of business and management of
emerging technology?
risks?
Is the frequency of existing monitoring and reporting to
the audit committee sufficient in light of the pervasiveness
ESTABLISH INFORMATION & COMMUNICATION
of the emerging technology and its impact on financial
PROTOCOLS
reporting?
Information and communication are crucial to the dynamic
What monitoring has been established by management to
process of managing risks and achieving financial reporting
consider the emerging technology risks related to
objectives. Managers need current, complete, and accurate
recording, processing, summarizing, and reporting on
information to conduct their activities. Audit committees
financial information – including management’s
must have confidence that controls are in place to make sure
discussion and analysis – and
financial statement
that all information needed for financial reporting purposes
disclosures?
is captured, used, and retained in a timely and accurate
In the event of a failure or deficiency related to
manner. When new systems or processes are being
management’s obligations, what processes and controls
developed by using a form of emerging technology, the
are in place to help ensure that appropriate levels of
impact on existing processes and systems, including
management and the audit committee are involved in the
integration risks, also should be considered.
review of the related disclosures, if applicable?
Audit committees should have communication protocols for
IMPACT TO THE AUDIT: QUESTIONS FOR AUDITORS
obtaining the information they need to effectively carry out
To inform their oversight activities related to management,
their responsibilities, which may require the managers of
audit committees should have discussions with their auditors
large technology projects to present their progress on a
about emerging technologies used in financial reporting. The
periodic basis.
following questions may help audit committees engage with
auditors on this topic:
OVERSIGHT IN ACTION:
How will key financial reporting needs be considered to
Does the audit engagement team include individuals with
minimize potential disruptions when implementing the
the right expertise to assess and address risks related to
emerging technology?
the emerging technology? Is there a need to involve
How will the technology integrate with the current IT
additional specialists? If so, will they be from within the
systems? Are there any integration risks that need to be
audit firm or external resources?
addressed?
What is the audit firm’s experience with the emerging
How has management evaluated existing IT practices to
technology?
help ensure they address data management and
How has the impact of the emerging technology been
governance for the emerging technology?
considered during the auditor’s risk assessment process?
Do existing communication lines (internal and external)
Does the emerging technology have a significant impact on
need to be evaluated to help ensure continued
the planned audit scope?
compliance with financial statement disclosure
Has the audit team identified any additional risks that
requirements?
management has not sufficiently explored?
MONITOR EMERGING TECHNOLOGY ACTIVITIES
Monitoring represents an ongoing process to ensure that
policies, procedures, and controls are present and
functioning effectively. Both management and the board
will have ways to assess whether controls are operating
effectively, and technology considerations should be part of
those monitoring efforts. Audit committees may consider
leveraging the internal audit function to probe whether
emerging technology programs are operating with an
appropriate level of rigor and control so that financial
reporting objectives are met.
If deficiencies are identified, the audit committee plays an
important role in making sure appropriate corrective action
is taken in a timely manner. Finally, understanding the
external auditors’ perspective and how they approach
financial reporting risks associated with emerging
technologies likely would be a part of the audit committee
agenda.
OVERSIGHT IN ACTION:
What monitoring activities have management put in
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CONCLUSION
While emerging technologies often may be considered the
domain of engineers and entrepreneurs, audit committees need
to be engaged in their company’s discussion related to these
technologies when they could have a potential impact on
financial reporting. An understanding of these emerging
technologies and awareness of the opportunities and risks they
present is essential for audit committees to discharge their
oversight responsibilities.
REFERENCE:
Survey
URL:
http://thecaq.qualtrics.com/jfe/form/SV_d44SPcpTIEUs0aV
See:
NACD, Director FAQ on Board Oversight of
Emerging Technologies (NACD, August 2018). Used with
permission from NACD.
ABOUT THE CENTER FOR AUDIT QUALITY (CAQ)
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dedicated to enhancing investor confidence and public trust in
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