Technology Cannot Replace Auditor Judgement: NFRA

The National Financial Reporting Authority (NFRA) has issued ten general principles to guide auditors in adopting and using technology during audit engagements.

The framework supports the responsible use of modern audit tools to improve the efficiency, accuracy and effectiveness of audit procedures. Technologies such as data analytics, automated testing and other digital solutions may assist auditors in examining financial information, identifying risks and gathering audit evidence.

However, NFRA has clarified that technology should only support professional judgement and cannot replace the auditor’s independent assessment. Reliance on automated systems, software outputs or technology-generated results does not reduce the auditor’s professional responsibilities.

Auditors are expected to critically evaluate technology-assisted findings, apply appropriate professional scepticism and ensure that the tools used are suitable for the nature and scope of the audit. They must also consider the reliability of data, the effectiveness of technological processes and any limitations affecting the resulting audit evidence.

The principles reaffirm that responsibility for the planning, execution and overall quality of an audit continues to rest with the auditor. Accordingly, the use of sophisticated technology cannot be cited as a reason for inadequate audit procedures, unsupported conclusions or failures in professional judgement.

NFRA’s guidance seeks to promote technology-enabled audits while preserving accountability, professional competence, ethical conduct and compliance with applicable auditing standards.

CA Sansaar