Big Data and Changes in Audit Technology: Contemplating a Research Agenda

This study explores the most recent episode in the evolution of audit technology, namely the incorporation of Big Data and Data Analytics (BDA) into audit firm approaches. Drawing on 22 interviews with individuals with significant experience in developing, implementing or assessing the impact of BDA in auditing, together with publicly available documents on BDA published within the audit field, the paper provides a holistic overview of BDA-related changes in audit practice. In particular, the paper focuses on three key aspects, namely the impact of BDA on the nature of the relationship between auditors and their clients; the consequences of the technology for the conduct of audit engagements and the common challenges associated with embedding BDA in the audit context. The study’s empirical findings are then used to establish an agenda of areas suitable for further research on the topic. The study is one of the first empirical accounts providing a perspective on the rise of BDA in auditing

External Auditors and Corporate Corruption: Implications for Audit Regulators.

The purpose of the current study is to examine the responsibility of external auditors in relation to corporate corruption and to highlight the implications of this for external audit regulators. The current study is based on a critical review of prior academic literature as well as a thorough examination of both the International and American Auditing Standards relating to fraud and illegal acts. External auditors have a responsibility for assessing corruption risks but their role was not clearly defined by external audit regulators. The current study was the first to clarify the responsibility of external auditors with regards to corporate corruption, and to shed light on current limitations in the audit standards related to this area. The current study also offers recommendations to audit regulators, external auditors, audit firms, and researchers on such controversial area

Multinationals’ Accountability on Sustainability: The Evolution of Third-party Assurance of Sustainability Reports

In this article we explore how multinational corporations (MNCs) adopt assurance practices to develop and sustain organizational accountability for sustainability. Using a panel of Fortune Global 250 firms over a period of 10 years, we document the diffusion patterns of third-party assurance of sustainability reports. We specifically investigate how evolving auditing practices, namely diversity of assurance standards and type of assurance providers, shape the quality of sustainability assurance statements. The results illustrate great variability in the adoption of assurance practices in the formative stages of this novel market. Our descriptive analysis indicates the relevance of external institutional pressures as well as internal resources and capabilities as underlying factors driving the adoption of assurance. Our evidence also suggests that several MNCs project a decoupled or symbolic image of accountability through assurance, thereby undermining the credibility of these verification practices. The paper contributes to the emerging literature on international accountability standards and emphasizes the need to enhance theory-based, cross-disciplinary knowledge related to auditing and accountability processes for sustainability

Evaluating Audit Quality Using the Results of Inspection Processes Performed by an Independent Regulator

This research adds to the audit quality literature by examining inspection findings generated by an independent regulator in an African setting. The study is concerned with the nature of weaknesses identified at both firm and engagement level, categorising inspection findings according to their possible impact on audit quality and identifying those aspects of audit practice which result in inspection findings. An exploratory research design is used. Inspection findings are reviewed and categorised with results presented graphically. Several audit quality weaknesses at the firm and engagement level are revealed. The number of audit practice deficiencies move in tandem with incidences of poor documentation standards. In addition, the frequency and impact of inspection findings are affected by: (1) the subjectivity of processes used to test balances and transactions; (2) the extent to which applicable standards are principles-based rather than procedural; and (3) the need to develop tailored test procedures to address relevant risks. At the practical level, the findings are important for engagement leaders, regulators, audit committees and investors interested in understanding better those aspects of audit practice which are likely to result in lower-quality audits and less reliable audit reports. At the empirical level, the study provides an original review of audit quality inspection findings from a novel setting. An exploratory design complements the largely positivist-inspired research on audit quality and examines a practice-focused perspective on audit quality which moves away from inferential testing of quality surrogates