How the PCAOB Is Bringing Technology into Audit Oversight

Auditors love a good checklist, but technology doesn’t always wait for box-ticking. For years, firms have been experimenting with AI, data analytics, and other advanced tools, while regulators have adhered to standards that appear to have been written on dial-up internet. That gap is finally narrowing. The Public Company Accounting Oversight Board (PCAOB) has just released new standards on technology-assisted analysis and shared a study containing four bold recommendations for enhancing audit quality. Pair that with the billion-dollar AI strategies flying out of accounting’s biggest names, and we might be staring at the profession’s version of “taking it up a notch.”

The PCAOB Gets Tech Serious

In 2022, the PCAOB established the Technology Innovation Alliance (TIA) Working Group, chaired by Christina Ho. Their job? Determine how emerging technologies impact audits and what the PCAOB should do in response. Fast-forward to September 2025, and the board posted two significant documents: a Current State Deliverable (dated August 2023) and "Transforming Audit Quality Through Technology" (dated May 2024). Both are still fresh, especially given the breakneck pace of AI.

What’s inside? The TIA offered four key plays:

• Promote structured, standardized data for audits.
• Explore AI responsibly—yes, even regulators need hands-on experience with AI.
• Build an “Innovation Lab” to run tech sprints and beta tests with firms.
• Push for stronger tech literacy in auditor skillsets.

That last one hits home. As the report bluntly put it, some auditors “lack skillsets in technology, data analysis, and AI,” which is a nice way of saying they are unprepared for modern tools. If you’re thinking this sounds like a regulatory nudge toward AI-powered auditing, you’re right. It aligns neatly with our earlier coverage of the Big Four’s AI strategies and BDO’s $1 billion AI investment, where firms are racing to integrate automation, agentic AI, and analytics into their daily audit work.

New Standards, New Responsibilities

At almost the same time, the PCAOB also updated two major auditing standards: AS 1105 (Audit Evidence) and AS 2301 (Responses to Risks of Material Misstatement). The changes aren’t window dressing; they directly address how auditors should use technology-assisted analysis.

Here’s the quick rundown:

• Audit Evidence (AS 1105): Auditors must now test IT general controls and automated controls when relying on electronic information. No more “trust but verify later.”
• Multi-purpose Use: The same data analysis can serve multiple objectives, but each objective must stand on its own merits.
• Tests of Details (AS 2301): Clarified and moved, so auditors know exactly how to separate substantive tests from analytics.

And the PCAOB gave us a helpful before-and-after example in accounts receivable auditing:

• Before: Auditors often avoided heavy reliance on electronic data because IT controls weren’t well tested. Manual verification ruled the day; slower, costlier, and prone to human error.
• After: With the amendments, auditors are expected to rigorously test IT general controls and automated application controls. Once the data passes that test, auditors can lean on technology-assisted analysis to flag unusual transactions, run multiple objectives off the same dataset, and investigate all items that meet certain criteria (say, every AR entry over $1 million).

Think of it like upgrading from a flip phone to a smartphone: the basics still apply, but now you’ve got apps that can save time and cut manual grunt work. In practice, this means fewer redundant procedures and more reliable evidence.

Everyone’s Jumping on the AI train

Meanwhile, firms aren’t waiting for regulators to bless their tech. McKinsey’s proprietary AI, Lilli, already cuts research time by 30%. Thomson Reuters is touting AI tools that claim to save tax pros 240 hours a year. Sovos rolled out “Sovi,” pitched as the first AI-driven tax intelligence solution. And Docyt is chasing the holy grail of month-end close automation. Intuit? They’ve been integrating AI into QuickBooks and tax preparation as if it were second nature.

And here’s where the numbers get loud:

• 39% of internal auditors already use AI, and another 41% plan to adopt within 12 months, meaning adoption will hit 80% by 2026.
• 61% of accountants see AI as an opportunity to boost accuracy and ditch repetitive work.
• The AI market in accounting is forecast to jump from $6.68 billion in 2025 to $37.6 billion by 2030.
• 98% of firms already use AI-based tools for routine tasks, but only 29% of entry-level staff are proficient in AI auditing.

That gap is the elephant in the audit room. Technology is everywhere, but human skills aren’t keeping up.

Questions Worth Asking

This all sounds promising, but it raises some big-time questions:

• Will regulators keep pace with firms’ AI adoption, or will there always be a lag?
• Can auditors trust AI outputs without losing professional skepticism?
• What happens when smaller firms, who can’t afford billion-dollar strategies, try to play catch-up using open-source AI?
• And maybe the toughest: how do we close that 29% proficiency gap before the next audit busy season?

Those aren’t hypothetical worries. The PCAOB’s call for tech literacy feels less like advice and more like a warning label: get with it, or risk being left behind.

No Free Rides

Auditors love precision, so here’s a precise point: compliance is catching up, but adoption is still uneven. The PCAOB’s standards make it clear that you can’t just throw AI at a problem and call it a day. Reliability, controls testing, and human judgment still matter, big time. The smarter play? Blend innovation with accountability. Regulators like the PCAOB are creating space for experimentation, while firms are pushing the envelope with billion-dollar AI bets. For practitioners, the move is simple: stay curious, keep sharpening tech skills, and don’t be afraid to lean on tools that can cut the busywork so you can focus on judgment calls that actually require a human brain. As Benjamin Franklin said, “An investment in knowledge pays the best interest.” In 2025, that interest just happens to be accruing in AI. Subscribe to MYCPE ONE Insights and get the latest on AI and audit delivered straight to your inbox.