An examination of factors associated with investment in internal auditing technology

Abstract

Purpose The purpose of this study is to explore whether various organizational, internal audit function and audit committee factors are associated with internal audit investment in audit technology. Design/methodology/approach The responses from 213 public and private company chief audit executives (CAEs) from seven Anglo-culture countries are analyzed from the Common Body of Knowledge (CBOK) 2015 Global Internal Auditor Practitioner Survey on specific questions addressing internal audit use of audit technology. Findings The results indicate that several of the studied factors are associated with investment in internal auditing technology, and taken together, suggest that CAE power may be the key driver in the technology investment decision. Furthermore, the data show that internal audit functions are not fully embracing the use of information technology (IT) tools and techniques, with average usage of ten of the eleven tools and techniques examined below moderate levels. Practical implications The results have implications for CAEs, boards and management when making resource allocation decisions. For example, the findings can be used in benchmarking an appropriate investment in internal audit technology, as well as identifying specific internal audit technology areas where further investment may be warranted. Additionally, insights provided by this study can facilitate a discussion about the value internal audit can add by increasing its investment in audit technology. Originality/value This study contributes to prior literature on internal auditing by filling a gap related to internal audit investment in audit technology, examining countries that are similar in culture rather than limiting the study to one country, and using several factors that have not been previously examined in prior internal audit investment-related literature. Additionally, the findings pointing to the important role CAE power appears to play in the internal audit technology investment decision provide several interesting new research avenues.

Outsourced internal audit function and real earnings management: The role of industry and firm expertise of external providers

“…This trend in investments of outsourced IAF as reported in this study is higher than the results reported in IIA's 2010 study that reported only 26% of respondents expecting an increase in the budget (Barr‐Pulliam, 2016). Recent empirical research for CAEs from Anglo‐culture countries also reveals 30% of respondents expecting an increase in their budgets for outsourced IAF (Garven & Scarlata, 2020).…”

Continuous auditing in public sector and central banks: a framework to tackle implementation challenges

“…Specifically, amongst them, management support contributes the most to enhance internal audit effectiveness. In this regard, also other scholars argue that top management support can be considered the foundation of the internal audit effectiveness, as it is crucial to guarantee the objectivity and independence of internal auditors (Al–Twaijry et al , 2002; Cohen and Sayag, 2010) and to invest adequate resources in internal auditing (Garven and Scarlata, 2020).…”

Factors associated with the adoption of data analytics by internal audit function

“…There is a wide call for theory development explaining the analytics adoption and implementation process (Nielsen, 2018); scholars also agree that the adoption of audit analytics in industry has not progressed as expected (Ahmi et al, 2016;Bieger, 2015;Dai, 2017;Garven and Scarlatta, 2020;Pham et al, 2021). Of the group of promising reference discipline theories applicable to the phenomenon, it seems clear that a process-theoretic approach is compelling (Dagilien_ e and Klovien_ e, 2019; Krieger et al, 2021), as the elements of the decision to adopt deploy in a process that spans an interdependent series of decision junctures and influences.…”