Technological change -- A glass half empty or a glass half full: Discussion of "Meeting the challenge of technological change," and "Business and auditing impacts of new technologies";

              Technological Change - A Glass Half Empty or a Glass Half Full: Discussion of "Meeting the Challenge of Technological Change," and "Business and Auditing Impacts of New Technologies"
Urton Anderson
University of Texas
Will there still be work for auditors in the year 2016? This is the question James Sylph and Gregory Shields initially posed in their paper "Meeting the Challenge of Technological Change - A Standard Setter's Perspective." It is also the question addressed, albeit more implicitly, in the paper by Charles Le Grand, "Business and Auditing Impacts of New Technology." While both papers agree that technological change will have a dramatic impact on the auditing profession over the next 20 years, their perspectives are quite different. Whereas the Sylph and Shields see technological change as "a glass half empty," Le Grand views technological change "as a glass half full" in terms of opportunities for the auditing profession.
The difference in these views comes from how each defines auditing. Sylph and Shields take what I will call the "attestation perspective," going back to the 1973 ASOBAC (A Statement of Basic Auditing Concepts) and its framework for conditions which create demand for auditing. Le Grand, on the other hand, takes what I will call the "assurance perspective" with an emphasis on reliability of systems and improvement in their performance. While these perspectives both describe the traditional external audit of the financial statements, different attributes of the product of the audit process are emphasized.
Attestation versus Assurance
The definition of auditing presented in ASOBAC, and subsequently in the majority of auditing textbooks, is as follows:
Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users. (American Accounting Association, 1973).
ASOBAC further qualifies the definition of "auditing" by adding the restriction that "quantifiability is an attribute which subject matter must possess to be auditable." In this view the product of the audit process is a statement about the quality of the information contained in the assertions (i.e., the information presented in the financial statements either meets or does not meet some quality criteria). Indeed, this definition characterizes quite well the external auditing of financial statements, particularly as practiced in the 1970s, as well as the activity that today we would call "attestation."
However, the ASOBAC definition is less than satisfying when one moves from the case of the external audit of financial statements to other activities which most would regard as also properly being classified as "auditing." One need only consider the layman's image of the auditor as the IRS agent examining a tax return, the person introduced at the Academy Award ceremony, or the one standing by as the balls are selected during the weekly state lottery drawing, to see the limited nature of the ASOBAC definition.
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