Audit Methodology: Opportunities and Threats

Running head: AUDIT AND ASSURANCE SERVICES
Audit
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
Opportunities and Threats to Traditional Audit Methodology from Innovation.............................3
Opportunities...............................................................................................................................3
Threats.........................................................................................................................................5
Auditor’s Ability to Maintain Ethical Principles for Making Independent Opinion.......................7
Capacity of Regulators....................................................................................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
In this era of business development, Auditing is considered as an important aspect for the
success of the business organizations. Auditing refers to the process of conducting inspection on
the financial statements of the business organizations in order to ensure that they are free from
material missstements (William Jr, Glover and Prawitt 2016). Thus, at the time of conducting the
audit operations, the auditors are required to undertake different analytical procedures to check
the internal control of the companies. It needs to be mentioned that the auditors have to face
different types of difficulties while conducting the audit operations and all these difficulties can
be considered as the major hindrances in maintaining the quality of audit operations. For this
reason, technological innovation in audit profession is regarded as the answers of most of these
issues in auditing. It can be seen that most of the business organizations are implementing
technological innovation for easing the audit operations (Leung et al. 2014).
In the recent years, there are certain issues affecting various aspects of audit operations
and these issues lead to the ‘relevance’ debate of the audit profession. There are still many
organizations using the techniques of traditional auditing and these companies have not
implemented technological innovation (Arens, Elder and Mark 2012). In this context, it needs to
be mentioned that the business organizations can avail major benefits from the implementation
of innovation in the auditing process. At the same time, the traditional auditing process also has
to face certain difficulties from adopting the technological innovation. In this whole process, the
audit regulators also face certain difficulties in order to maintain the required audit standards as
per ethical considerations (Knechel and Salterio 2016). This report takes into account the
analysis and evaluation of opportunities and threats in traditional auditing due to technological

3AUDIT AND ASSURANCE SERVICES
innovation. After that, another objective of this report is to review the ability of the auditors in
maintaining ethical principles as per independent opinion. Lastly, this report aims to analyze the
capacity of the regulators to keep pace with audit profession in the achievement of the required
audit standard.
Opportunities and Threats to Traditional Audit Methodology from Innovation
As per the above discussion, it can be seen that the technological innovation provides
both opportunities and threats to the traditional audit methods and processes. It needs to be
mentioned that the auditors are required to take into consideration all these opportunities and
threats in order t maintain the quality of audit operations and to avoid the ‘relevance’ debate
related to the traditional audit opinion (Deschamps and Nelson 2014). The following discussion
shows the major opportunities and threats to traditional audit methods and processes:
Opportunities
As mentioned earlier, auditing refers to the process of inspecting the financial statements
of the companies in order to find whether there is any material missstements or not. In this
process, the auditors are needed to examine various financial statements of the companies like
income statements, balance sheet, statement of cash flows and others. In simple words, the
auditors are required to examine the financial amounts (Barton and Bruder 2014). Hence,
auditing is all about numbers. With the implementation of innovation in different aspects of
auditing, the auditors become bale to gather large number of financial data of the companies and
to process them so that the clients can be provided with high quality of audit services.
Technological innovation has brought large positive change in the process of data analytics in the
auditing process and this change in innovation has changed the whole process to conduct audit