The Institute of Chartered Accountants in England and Wales (ICAEW) has built a 10% stake in data platform Engine B which aims to assist audit firms in identifying fraud and financial misstatements.

Engine B was founded in London in 2019 by Shamus Rae, 54, former head of digital disruption at KPMG. Mr Rae is working with accounting companies, Microsoft, Imperial College London and the University of Birmingham to create an open platform that will provide technology to help accounting firms to analyse client data for audits.

It will use AI to read and compare different data inputs, including contracts, invoices and bank accounts, to assess measures such as cashflow, The Times reports.

Engine B said that its platform would increase competition in the accountancy market. Currently, firms have to create a new model to source information for every audit client, pricing out smaller players. While about 15% of audit work is automated, Engine B says that could be increased to 70%.

Mr Rae said: “It would mean that some of the big audit failures that have happened recently wouldn’t have happened.”

The Institute of Chartered Accountants, which represents 154,000 accountants, has invested £550,000 in Engine B and will join the firm’s board.

The investment comes after a series of scandals where auditors failed to highlight failures in accounting before serious alleged frauds were uncovered.

Yesterday, the Financial Reporting Council launched a consultation on the revised auditing standards for auditor’s fraud responsibilities

Sharron Gunn, executive director at the ICAEW, said: “The audit industry is under scrutiny and we believe this will help its transformation. We are keen for the whole profession to be able to partake in this.”