The Impact of Audit Technology on Audit Task Outcomes: Evidence for Technology‐Based Audit Techniques*

Abstract

As audit technology becomes more widespread, practice and academia are raising concerns about the costs and benefits of these technologies. We examine how internal auditors use technology‐based audit techniques (TBATs) and how TBATs impact the efficiency and effectiveness of their audits. We use two surveys and interviews of individual auditors and chief audit executives (CAE) to examine their perceptions of TBATs. Auditors perceive TBATs as beneficial. Specifically, an increase in the use of TBATs is associated with completing more audits, finding more risk factors, providing more recommendations, and decreasing audit days. However, CAEs also perceive TBATs to be costly. An increase in the use of TBATs is associated with an increase in the size of the internal audit function. Finally, interviews with CAEs suggest that TBATs are not used more often because of difficulties in quantifying their benefits, observing their benefits in a timely manner, and hiring auditors with appropriate skills. Overall, TBATs stand to increase the efficiency and effectiveness of audit tasks, but auditors struggle to quantify their net cost‐benefit tradeoff. Our findings validate the issues raised by both proponents and opponents of audit technologies and help provide empirical data to inform their decision‐making process regarding the future of these tools. Additionally, our study prompts several avenues for future research that can help inform regulators, practitioners, and researchers on how these technologies are impacting the auditing profession.

The Role of IT (Information Technology) Audit in Digital Transformation: Opportunities and Challenges

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“…As organizations undergo digital transformation, the role of IT audit becomes increasingly vital in ensuring the effectiveness and security of digital initiatives (Isaca, 2019). Traditionally, IT audits focused on assessing compliance with regulatory requirements and internal controls (Eulerich et al, 2022). However, in the era of digital transformation, the role of IT audit is evolving to encompass broader responsibilities, including risk management, cybersecurity, and governance (Isaca, 2020).…”

“…IT audit, traditionally focused on evaluating the effectiveness and integrity of IT systems and controls, is evolving in response to digital transformation (Eulerich et al, 2022;EY, 2020). In addition to its traditional objectives, IT audit now plays a broader role in supporting organizations' digital initiatives (Isaca, 2020;PwC, 2018).…”

The Extent of Big Data Analysis by External Auditors: A Study of Practices and Prospects in Palestine

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“…Second, in order for auditors to be competent, they not only need to invest in cutting-edge equipment but also have staff who are proficient in its use. Due to the large demand and remuneration for people having abilities in technology in other fields, the accounting profession today is confronted with major hurdles in hiring those capabilities (Christ et al, 2021;Eulerich et al, 2022;Maksymov et al, 2021).…”