Hosting and Client Portals

Where the client data resides is a key consideration. Hosting services include keeping an attest client’s depreciation records, historical tax returns, etc. In short, the auditor may not serve as the client’s record storage or disaster recovery provider. To maintain independence, complete records must be provided to and maintained by the client. Further, the client’s access to the data in the auditor’s possession must be terminated after a reasonable period.

Commercial Off-The-Shelf Software (COTS)

An auditor may assist with COTS implementation by providing training, advice, and other types of services. Creating new code or other steps that alter COTS functionality, writing a custom interface to a COTS, or custom data translation would impair independence. Use of third-party applications for interfaces and data translation allows the possibility of remaining independent.

Other Data Analysis Tools

Dashboards and data analysis applications should be analysed to determine if they are a financial information system (FIS) or merely a tool. Designing, developing, or utilising a FIS on behalf of a client impairs independence; design, development, or use of a tool does not. A tool performs only discrete calculations. A FIS aggregates or generates data that is significant to the financial statements or financial processes.

Keeping Independent

It is critical to avoid performing any management functions. The auditor should assure that the client (1) has the appropriate skills, knowledge and experience, (2) evaluates and accepts responsibility for any inputs and assumptions, and (3) has suffcient information to understand the processes and results.

Published: Auditing, Reporting & Compliance Newsletter, No. 05, Spring 2021 l Photo: Byelikova Oksana - stock.adobe.com