How the PCAOB Can Promote Technology Use in Auditing
September 4, 2025
The Technology Innovation Alliance Working Group has provided the audit regulator with four recommendations on how it can proactively and strategically promote the use of technology in auditing.
A group of professionals from outside of the Public Company Accounting Oversight Board with expertise in emerging technologies has provided the audit regulator with four recommendations on how it can proactively and strategically promote the use of technology in auditing.
Launched in November 2022, the Technology Innovation Alliance Working Group was tasked by the PCAOB with providing the board with:
A study on the use of emerging technologies by auditors and financial statement preparers relevant to audits and their potential impact on audit quality, and
Recommendations regarding how the PCAOB’s existing or future oversight programs might address the use of emerging technologies by auditors and preparers.
The TIA Working Group concluded its work in August 2024.
On Sept. 3, the PCAOB posted both documents—the study (completed on Aug. 30, 2023) and the recommendations (completed on May 30, 2024)—to its website.
“Innovation in public company auditing is essential because it can serve as an engine that improves audit quality,” Christina Ho, a PCAOB board member who chaired the working group, said in a statement. “As the chair of the TIA Working Group, I am grateful to our 10 members and the many stakeholders who generously contributed their time and expertise. Although it has been 15 months since the TIA Working Group presented its recommendations to the PCAOB Board, they remain relevant even with the unprecedented advancement in technology. I hope that these recommendations will spark renewed and urgently needed dialogue on how audit regulations can enable innovation by advancing the responsible use of technology by audit firms in conducting public company audits.”
The study, Current State Deliverables, offers perspective on the current needs at the time and motivations of investors and others, the broad evolution of auditing, an overview of the current state of technology in auditing and financial reporting, and challenges related to technology adoption for auditors and preparers.
The other document, Transforming Audit Quality Through Technology, presents the following four strategic ideas on how the PCAOB can promote the use of technology in auditing:
1. Promoting structured data creation and dissemination in public company audits
Standardize audit documentation technology
Digital signatures
“Good data is fundamental to leveraging technology that is functional and effective for its proposed use. If the data is missing key attributes and fields, is inaccurate, biased, or otherwise difficult to access and use, then the technology built on this data will have limited utility,” the report says. “This presents a need to ensure that any data received and created from the auditing process is accessible, standardized, reliable, and contextualized before it can be used to effectively develop trusted AI models for performing audit procedures.”
2. Using artificial intelligence in audit
Explore AI in the PCAOB
Develop responsible use of AI principals in audit
“[W]hen the PCAOB consumes data by inspecting workpapers, this presents an opportunity for the PCAOB itself to experiment with data-driven technologies and analyses,” the report says. “Perhaps the PCAOB could use AI technology to assess work papers in a more efficient way on a continual basis, or to test the benefits of standardizing audit documentation. This kind of hands-on experience could give the PCAOB a more in-depth understanding of the benefits and challenges of using AI in conducting audits, which could then help it effectively oversee how audit firms use AI.”
3. Regulatory innovation capacity building: Facilitate ongoing innovation in audit quality
Establish innovation lab, host tech sprints, and facilitate structured beta environment
“In addition to using AI itself, the PCAOB could deepen its understanding of the use of AI by audit firms and therefore build on its evidence-based approach to standard setting by creating opportunities for structured experimentation and information sharing among the PCAOB, audit firms, and technologists,” the report states. “This would help address some barriers in the adoption of technology by audit firms such as limited information sharing, stunted collaboration, and perceived regulatory uncertainty. The setting for this experimentation could take the form of a PCAOB-hosted “Innovation Lab” that could host structured events and programs aimed at understanding and testing technology used by firms in conducting an audit.
“One type of event could include a ‘tech sprint,’ a time-boxed period where small teams work together to generate minimally viable solutions for problems in conducting audits. This could be used for prototype generation, primarily to create ideas to help the PCAOB learn how its data could be used and to develop tools that could improve PCAOB programs,” the report continues. “Another approach is creating a structured beta environment used for collaborative testing with third parties (e.g., audit firms, tech solution providers) for specific experimentation initiated by the PCAOB. For example, before amending standards and rules related to technology, the PCAOB may want to understand, for instance, how 100% testing would work, how AI could enhance risk assessments, or how AI can be used for fraud detection.”
4. Encourage technology literacy in auditor skillsets
Promote technology and data analytics skills among audit professionals
“The TIA Working Group heard from stakeholders that some auditors lack skillsets in technology, data analysis, and AI, which in turn, hinders the adoption and sophisticated use of technology within audit firms. While dictating the pedagogy at institutions of higher education and how audit firms train their workers is beyond the scope and jurisdiction of the PCAOB, the PCAOB could nonetheless encourage institutions of higher education to include in their accounting curricula core subjects such as advanced principles of data analytics, computer science, and artificial intelligence,” the report says.
“In addition, the PCAOB could encourage educators to highlight (1) that the use of technology while conducting an audit cannot replace human judgment and understanding and (2) that professional judgment and skepticism are equally important when using technology and must be performed by people, not machines. This would help close the gap between the theoretical benefits of new technology and the on-the-ground implementation of technology within public company audits.”
[CPA Practice Advisor]
