Welcome to the sixth Market Scan from the IAASB's Disruptive Technology team. Building on our ongoing work, we issue a Market Scan every 2-3 months. Market Scans cover exciting trends, including new developments, corporate and start-up innovation, noteworthy investments and what it all might mean for the IAASB.

In this Market Scan, we explore Robotic Process Automation, a technology used for executing repetitive tasks that has applications across the audit process, from data transformation to workpaper creation, as well as potential for forming part of an audited entity’s IT environment.

Technology Landscape, September 2022

We cover:

• What is Robotic Process Automation and why is it important?
• The latest developments
• What this might mean for the IAASB

What is Robotic Process Automation and why is it important?

Robotic Process Automation (RPA) is a technology that involves creating software robots or “bots” to perform repetitive, routine manual tasks, such as extracting data, filling out forms or moving files. By completing rules-based actions that emulate human processes, RPA tools can autonomously complete various activities across multiple unrelated software systems. 

What is RPA (Robotic Process Automation)? Two-minute watch, Eye on Tech

What is RPA (Robotic Process Automation)? Two-minute min watch, Eye on Tech

RPA has evolved in recent years with companies such as Automation Anywhere, Blue Prism and UiPath developing ever more sophisticated technologies to automate tasks, workflows and processes. Coupling RPA with artificial intelligence technologies, such as machine learning, has enabled businesses to automate more complex tasks that may involve more judgment or use of unstructured data. This combination of technologies is often referred to as Intelligent Automation or Cognitive Automation.

RPA within the audit process

There are several areas across the audit where RPA can be deployed to drive efficiency in the audit process as well as improve audit quality by enabling consistency of outputs.

• Data preparation – combining data sets (e.g., general ledger transactions and trial balance information) and carrying out transformation actions to prepare data for use in automated tools.
• Transaction matching and reconciliation – automating the process of matching transactions to external datasets (e.g., bank statements)
• Basic documentation – completion of basic standardized documentation, such as workpapers, checklists or templates based on prescribed inputs (e.g., trial balance information or information documented elsewhere in the audit file)

RPA within audited entities

Audited entities may use RPA to support certain business processes or repetitive task activities, such updating records, processing transactions or completing reconciliations.

Benefits of Robotic Process Automation, Digital Beanie

Recent Noteworthy Developments in Robotic Process Automation

These recent developments that may signal future disruption in this area. It is not a complete list of all activities in the field of RPA. For a reminder of Key Venture Capital and Investment terms please refer to the first Market Scan.

1.  RPA market experiences slowing growth

The RPA market is dominated by some key players, with the 10 largest RPA vendors accounting for over 75% of the market. There have been some indications in the RPA market that growth in this technology sector may have begun to slow, although double digit growth is still predicted for 2023. UiPath, one of the leading companies in RPA software, has seen its stock value continue to fall since its IPO in 2021. Whilst Automation Anywhere, another well-known RPA provider, sought to secure a $200 million loan and Blue Prism, another large player, agreed to a $1.5 billion takeover offer from Vista Equity Partners in September 2022.

2.     Startups with Low-Code and No-Code RPA Solutions

Whilst the traditional RPA industry may be slowing down, business process automation— a term used to describe the use of technologies, including RPA and AI, to streamline and automate more complex business processes—has seen continued growth, particularly with low-code or no-code solutions that can be deployed by those without coding skills.

• In May 2022, UiPath announced a new partnership with airSlate, a workflow automation company, to advance the development of workflow solutions to enable individuals and small businesses to digitally transform their organizations.
• In June 2022, Next Matter, a workflow automation platform for business operations, raised $16 million in a Series A funding round to expand its team and operations.
• In November 2022, Rewst a no-code RPA provider for managed service providers, raised $21.5 million in Series A funding to continue to build out its Robotic Operations Center.

What this might mean for the IAASB

The IAASB is interested in maintaining its collective knowledgebase on digital technologies (including on specific sub-topics such as robotic process automation), promoting digital readiness and enablement through its engagement with stakeholders, and encouraging action by others to supplement and support the IAASB’s standard-setting activities.

The IAASB is also keen to explore how technologies could be used to enhance interaction with auditing standards. Subject to the IAASB’s work plan decisions, possible use cases of digital technologies for audited entities and audit engagements might provide input to further modernize the IAASB’s standards to be adaptable to and reflect the current business and audit environment (while recognizing that the standards would address digital technologies in a principles-based manner).

The increasing accessibility of RPA through the growth of low code and no code technologies offers opportunities for those without extensive programming knowledge to develop solutions to address specific pain points or low value time-consuming activities in their everyday work, including for audit practitioners or audited entities.  

Where RPA or other robotics-based technologies are deployed by auditors to complete audit procedures, adequate governance and approval of these technologies needs to be in place to ensure they are designed effectively, fit for purpose and used appropriately, including provision of training or enablement where needed. Availability of no-code or low code technologies may give rise to wider use of small-scale RPA to address specific needs which has the potential to improve audit efficiency but if ungoverned, could impact audit quality.

The use of RPA in audited entities to automate actions previously performed by a person may change how a process and its related controls operate, and therefore the risks within the process and the appropriate audit response, which may include understanding how the use of RPA is being governed and controlled. As the use of this technology develops further, particularly when coupled with artificial intelligence technologies, this may present new challenges for the auditor and may, therefore, have implications for the IAASB’s work, whether in terms of future standard setting related to technology or facilitating or supporting action by others (e.g., developing guidance).

Useful Articles and Resources 

• Low/No-Code RPA: What it is & Development Best Practices | AI Multiple, four-minute read
• Robotic Process Automation for Auditing | Journal of Emerging Technologies in Accounting, eight-minute read
• Robots strengthen the Digital workforce | Deloitte Switzerland | Audit, four-minute read
• Is hyperautomation worth the hype? | E&T Magazine, five-minute read
• How do you audit a robot? | ICAEW, four-minute read
• What is business process automation? |Red Hat, three-minute read

Interesting story

KFC Draws Backlash for Automated Kristallnacht Promo Message - BNN Bloomberg, two-minute read

KFC, the popular fast-food chain, experienced a public relations disaster when its automated communications process messaged customers in Germany about a promotion to “commemorate Kristallnacht”. Kristallnacht was a series of Nazi pogroms that took place against German Jews in 1938. The company blamed an error in the automated process which linked calendar events to promotional content.

On January 1, 2023, the International Ethics Standards Board for Accountants (IESBA) welcomed two new members following their appointments by the Public Interest Oversight Board (PIOB) in November 2022.

Paul Muthaura (Kenya) is an independent consultant supporting the development of capital markets in emerging African jurisdictions. He is the Africa Chair for the Impact Infrastructure Commission; an Independent Member of the Financial Sector Deepening Trust, Kenya; and a Member of the Securities Advisory Board of the Toronto Centre for Global Leadership in Financial Supervision. A Lawyer and capital markets expert, his work experience includes risk management, standard setting, climate change, and sustainability.  He is a former board member and Africa Middle East Regional Chair of the International Organization of Securities Commissions (IOSCO) and has led in a financial services group with operations across East Africa. 

“It is an honor to be joining the IESBA at this important time,” said Mr. Muthaura. “I look forward to supporting the work to inject greater responsiveness, innovation, and impact in the IESBA Code and the broader reporting environment noting the global transition process.”  

Rania Uwaydah Mardini(Lebanon) is a Senior Lecturer at the Olayan School of Business at the American University of Beirut (AUB) and an advisor to the United Nations Development Programme (UNDP's) Regional Bureau for Arab States. Prior to this appointment, she was a Member of the International Panel on Accountancy Education (IPAE) that advises the International Federation of Accountants (IFAC) and has served as [Board] Member of the International Accounting Education Standards Board (IAESB), the IPAE’s predecessor and Chair of its Public Sector Accounting, Reporting, and Assurance Task Force. She has also served as Vice Chairwoman of the Lebanese chapter of Transparency International (TI) and as a consultant to the UNDP’s Anti-Corruption and Integrity in the Arab Countries (ACIAC) program. She started her career in assurance at Ernst & Young (EY), Beirut office. 

“We live in an increasingly complex environment where issues such as sustainability reporting and disruptive technologies present a wide range of unforeseen ethical dilemmas for accountants,” said Ms. Uwaydah Mardini. “Today,the IESBA’s role in providing the strong ethical guidance that drives accountants’ mindsets and judgements is ever so critical, and, as such, I look forward to the challenges and the learnings that this new position will bring!”

In addition to welcoming Mr. Muthaura and Ms.Uwaydah Mardini, the IESBA alsowelcomesthe appointment of Laurie Endsley as the Board’s new Vice Chair.  Laurie C. Endsley joined as a Member of IESBA in January 2020, after being nominated by PwC. Ms. Endsley is a partner with PwC and has worked for more than 30 years as an auditor and attorney.  

Ms. Endsley and current Board member Rich Huesken were both reappointed to the Boardby the PIOB, from January 1, 2023,for two-year terms.  

“On behalf of the IESBA I am happy to welcome our new membersand Icongratulate Laurieand Rich on their reappointments,” said IESBA Chair Gabriela Figueiredo Dias. “Paul and Rania come to our Board at a critical time, and I look forward to their diverse and unique insights. Their experiences and perspectiveswilladd to the IESBA’s knowledge baseand help guide our strategic thinking. I also look forward to partnering with Laurie, as Vice Chair, to help lead the IESBA as we tackle an aggressive schedule.”  

The PIOB’s Invitation for Applicationfor IESBA members for terms of service beginning in January 2024 is currently open. The IESBA encourages qualified candidates to apply. 

The International Auditing and Assurance Standards Board (IAASB) is pleased to welcome two new members to the IAASB following their appointments by the Public Interest Oversight Board (PIOB) in November 2022.

• Neil Morris (based in the UK) is the global head of assurance and ESG methodology at KPMG with more than two decades of experience in South Africa and the UK. A Chartered Accountant, his work experience includes risk management, climate change and sustainability, financial audit, and assurance.

“I’m looking forward to the challenge that this role will bring and working with my fellow members to deliver on the IAASB’s objectives, especially on the sustainability assurance standard,” Mr. Morris noted on joining the IAASB.

• Greg Schollum (based in New Zealand) is the Deputy Controller and Auditor-General of New Zealand, a position he has held since 2015 after first joining the Office of the Auditor-General in 2004. His career includes serving as a member of the International Public Sector Accounting Standards Board, the New Zealand Accounting Standards Board, and the Financial Reporting Standards Board of the New Zealand Institute of Chartered Accountants (now Chartered Accountants Australia & New Zealand).

“I’m looking forward to getting back involved in international standard setting and I hope that I can make a positive contribution in the public interest to the important work of the IAASB,” Mr. Schollum said following his appointment.

In addition to welcoming Mr. Morris and Mr. Schollum, the IAASB also welcomes the appointment of Josephine Jackson as Vice-Chair. Ms. Jackson is Director of International Audit and Assurance Standards Policy at the UK Financial Reporting Council and leads the FRC’s ESG Group. She is entering her second term as member of the IAASB and previously served as a board member Technical Advisor.

“I am delighted to welcome our new IAASB members and congratulate Josephine on behalf of the IAASB,” said IAASB Chair Tom Seidenstein. “Greg and Neil bring new experience and perspectives to the IAASB, and we look forward to including their thinking in deliberations at our next IAASB meeting in March. I also look forward to partnering with Josephine to help guide the IAASB through its important work in the public interest.”

The IAASB is also pleased to share that three members were re-appointed by the PIOB for terms that began on January 1, 2023:

• Sue Almond, a consultant with Grant Thornton International based in the UK with experience in global audit and assurance policies;
• Julie Corden, a partner with Deloitte Canada who is responsible for leading audit methodology, policies and guidance, including the firm's ISQM 1 implementation; and
• Josephine Jackson, the newly appointed Vice-Chair.

The PIOB’s Invitation for Application for IAASB members for terms of service beginning in January 2024 is currently open. The IAASB encourages qualified candidates to apply.

About the IAASB
The International Auditing and Assurance Standards Board develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

The IAASB has released a new edition of the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements, which includes:

• International Standard on Auditing (ISA) 315 (Revised 2019), Identifying and Assessing the Risks of Material Misstatement, replacing ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment. The handbook also incorporates in other relevant standards conforming and consequential amendments from ISA 315 (Revised 2019). ISA 315 (Revised 2019) is effective for audits of financial statements for periods beginning on or after December 15, 2021.
• The following standards, which are not yet effective for this version of the handbook, have been included in the back of Volumes 1, 2 and 3, as appropriate:
  • International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements
  • ISQM 2, Engagement Quality Reviews
  • ISA 220 (Revised), Quality Management for an Audit of Financial Statements
  • Conforming and Consequential Amendments to Other ISAs Arising from the Quality Management Projects
  • ISA 600 (Revised), Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors)
  • Conforming and Consequential Amendments to Other International Standards Arising from ISA 600 (Revised)
  • Conforming and Consequential Amendments to the IAASB’s Other Standards as a Result of the New and Revised Quality Management Standards
  • ISRS 4400 (Revised), Agreed-Upon Procedures Engagements

The handbooks can be downloaded from the IAASB website, where users can also order print copies of the three-volume handbook. It will also be available in the e-International Standards (eIS) online platform in 2023.

Reproducing and Translating the IAASB Handbook

To help adoption and implementation of the IAASB standards, stakeholders are invited to submit requests for permission to reproduce or translate the IAASB handbook online via the Online Permissions Requests or Inquiries system on the IFAC website.

The International Auditing and Assurance Standards Board (IAASB) has published a new fact sheet on the interactions between International Standard on Audit (ISA) 220 (Revised), which addresses quality management at the engagement level, and ISA 600 on group audits. The fact sheet highlights aspects of a group audit that may be affected by ISA 220 (Revised) and International Standard on Quality Management 1 addressing quality management at the firm level. This includes the revised definition of engagement team and leadership and direction, supervision, and review responsibilities.

The factsheet will be particularly useful for group audits in which component auditors are involved.

The International Federation of Accountants (IFAC) today released a new resource, The Risk Identification and Assessment Process: Tips on Implementing ISA 315 (Revised 2019). The tool helps auditors implement the International Auditing and Assurance Standards Board’s (IAASB) International Standard on Auditing (ISA) 315 (Revised 2019), Identifying and Assessing the Risks of Material Misstatement, which is effective for audits of financial statements for periods beginning on or after December 15, 2021.

The implementation tool provides an overview of core concepts and explains new and previously existing requirements. It also includes examples and emphasizes the scalability of the standard with a focus on less complex entities. The tool does not replace the need to read ISA 315 (Revised 2019), including its application and other explanatory material.

The resource is based on Chartered Professional Accountants of Canada’s (CPA Canada) Implementation Tool for Auditors and follows the release earlier this year of IFAC’s Auditing Accounting Estimates: ISA 540 (Revised) Implementation Tool. These tools support efforts to improve audit quality globally and, more broadly, international standards’ adoption and implementation. Additional guidance and resources are available on the dedicated Supporting International Standards section of the IFAC Knowledge Gateway.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in 135 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.

This implementation tool helps auditors implement the International Auditing and Assurance Standards Board’s International Standard on Auditing (ISA) 315 (Revised 2019), Identifying and Assessing the Risks of Material Misstatement, which is effective for audits of financial statements for periods beginning on or after December 15, 2021.