The Accounting and Corporate Regulatory Authority (ACRA) has issued Audit Practice Guidance No. 1 of 2025, titled “Delivering Quality Audits in a Technology-Driven Environment”, addressing the implications of rapid technological change on audit quality and audit firms’ Systems of Quality Management (SoQMs).
Context and regulatory focus
The guidance responds to the accelerating adoption of artificial intelligence, data analytics and automation in audit engagements. While these technologies can enhance audit efficiency and effectiveness, ACRA notes that they also introduce new and evolving risks that must be appropriately identified, assessed and managed within Accounting Entities’ (AEs’) SoQMs.
Key areas covered in the guidance
The publication highlights several critical considerations for audit firms:
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Risk assessment and monitoring within SoQMs
ACRA emphasises the need for audit firms to reassess their quality management processes to address technology-related risks, including those arising from:-
reliance on automated tools and models,
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data integrity and completeness issues, and
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governance and oversight of technology-enabled audit methodologies.
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Understanding the audited entity’s IT environment
The guidance underscores that a robust understanding of the audited entity’s IT systems, controls and data flows is fundamental to:-
identifying risks of material misstatement,
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assessing the reliability of system-generated data, and
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designing appropriate and effective audit responses in financial statement audits.
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Designing audit responses in a digital context
Audit approaches should be adapted to reflect how technology affects business processes and controls, including the interaction between manual and automated controls. -
Support for digital transformation of the profession
The guidance also highlights established initiatives aimed at supporting audit firms in building digital capabilities while maintaining high standards of audit quality.
Practical implications for audit firms
From a practitioner perspective, the guidance signals the following priorities:
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SoQM enhancements
Audit firms may need to update policies, procedures and monitoring activities to explicitly address technology-related risks and competencies. -
Skills and training
Increased emphasis on IT knowledge and professional judgement is likely, particularly for engagement teams auditing technology-intensive environments. -
Governance and accountability
Leadership responsibility for overseeing the use of advanced technologies in audits is reinforced, aligning with risk-based quality management principles.
Audit firms should review Audit Practice Guidance No. 1 of 2025 in detail, assess its implications for their existing SoQMs and audit methodologies, and consider whether enhancements to governance, risk assessment and training frameworks are required.
Source: ACRA, 26 December 2025