ACCT90014 · Auditing And Assurance Services
Contemporary Audit Issues
The final’s discursive short-answers live here. None of these issues needs a new rulebook — each is the core auditing concepts (independence, competence, sufficient appropriate evidence, professional scepticism) applied to an emerging setting, and the reward is for taking a fresh scenario and showing the standards still bite. Modern audits lean on specialists — valuers, actuaries, IT/AI experts — and ASA 620 lets the auditor use a management’s or an auditor’s expert, but the auditor remains solely responsible for the opinion: you cannot launder a judgement through a specialist and call it evidence. Two operational shifts — shared service centres (where routine work is done) and digital auditing / AI (how testing is performed) — raise the same worry: are we preserving the competence and due care the standards demand? And the fastest-growing frontier is sustainability / ESG assurance: investors, regulators and lenders increasingly demand assurance over non-financial information — emissions, modern-slavery and climate disclosures — and the same assurance framework applies (three-party relationship, subject matter, suitable criteria, evidence, written report), only the subject matter is messier and the criteria less settled.
What this chapter covers
- 01Why contemporary issues are old principles in new settings
- 02Use of specialists / experts (ASA 620): the auditor stays responsible
- 03Shared service centres: offshoring routine work and the competence worry
- 04Digital auditing and AI: full-population testing and the black box
- 05Sustainability / ESG assurance and the assurance framework re-applied
- 06Worked mini-example: an AI valuation model and a sustainability claim
Worked example: relying on a management's expert
- +1IDENTIFY & CITE: the valuation is the work of a management’s expert; ASA 500/620 govern using it as audit evidence. The auditor remains solely responsible for the opinion.
- +2Evaluate competence & objectivity: assess the valuer’s qualifications, experience and independence from the client — a valuer paid by, or close to, management is less objective.
- +2Evaluate the work: assess the appropriateness of the valuation as evidence — the methods, assumptions (discount rate, comparable sales) and source data; do not simply accept the figure.
- +1CONCLUDE & RESPOND: if the expert’s work is competent, objective and supportable, it is appropriate evidence; if not, gather further evidence (or engage an auditor’s expert). The responsibility for the conclusion stays with the auditor.
Key terms
- Auditor's expert vs management's expert
- An auditor's expert is engaged by the audit firm to assist in obtaining evidence; a management's expert is engaged by the client and whose work the auditor uses as evidence. Under ASA 620 the auditor evaluates competence, objectivity and the work itself, and remains solely responsible for the opinion.
- Professional scepticism
- An attitude of questioning mind and critical assessment of evidence — not assuming management is dishonest, but not assuming it is honest either. Central to contemporary settings where the evidence (an AI model, an ESG metric) is novel or opaque.
- Shared service centre
- A centralised (often offshore) unit performing routine processing or even audit support work. It raises questions about competence, supervision and the consistency of the work with the standards' due-care requirements.
- Sustainability / ESG assurance
- Assurance over non-financial information — greenhouse-gas emissions, modern-slavery and climate-related disclosures. The same assurance framework applies (three-party relationship, subject matter, suitable criteria, evidence, written report), but the subject matter is harder to measure and the criteria less settled.
- Assurance framework
- The five elements of any assurance engagement: a three-party relationship (practitioner, responsible party, users), an underlying subject matter, suitable criteria, sufficient appropriate evidence, and a written assurance report. It generalises beyond financial statements to ESG and other subject matter.
Contemporary Audit Issues FAQ
Can the auditor rely on a specialist's work?
Yes, but with conditions and without transferring responsibility. Under ASA 620 the auditor evaluates the expert's competence and objectivity and the appropriateness of the expert's work as evidence (methods, assumptions, source data). The opinion remains solely the auditor's — you cannot launder a judgement through a specialist and call it audit evidence.
How does AI / digital auditing change the audit?
It changes the technique, not the principles. Data analytics can test full populations rather than samples, which is powerful, but raises the 'black box' worry: the auditor must understand and be able to evaluate the tool's logic and the reliability of the underlying data, preserving competence, due care and professional scepticism. The standards still demand sufficient appropriate evidence.
Why is the same assurance framework used for ESG reports?
Because assurance is general. Any assurance engagement has a three-party relationship, an underlying subject matter, suitable criteria, evidence and a written report. ESG assurance simply applies that framework to non-financial information; the challenge is that the subject matter (e.g. emissions) is harder to measure and the criteria less settled than for financial statements.
How are contemporary-issue questions marked in the final?
As discursive short-answers that reward applying the core concepts to a fresh setting. The marks go to the candidate who identifies which familiar principle is in play (independence, competence, sufficient appropriate evidence, scepticism) and ties it to the specific scenario — an AI valuation model, an offshore service centre, a sustainability claim — rather than describing the technology.
Exam move
Do not learn these as new rules — learn them as old principles in new clothes. For any contemporary scenario, ask which core concept is at stake: independence, competence, sufficient appropriate evidence, or professional scepticism, then apply it to the facts. Lock the ASA 620 move (evaluate competence + objectivity + the work; responsibility stays with the auditor) because specialists recur. For AI/digital and ESG, be ready to name the benefit and the matching risk (full-population power vs the black box; broader assurance vs softer criteria). Practise short, structured paragraphs in the answer shape — identify the principle, cite, apply to the scenario, conclude — because that is exactly how Topic 12 is examined.
