Internal audits in the digital era: opportunities risks and challenges

Abstract

PurposeThe aim of this study is to examine continuous auditing in the digital age from the perspective of audit firm employees. It also investigates contemporary factors affecting continuous auditing, as well as the techniques that could be utilised for its implementation.Design/methodology/approachInternal audit departments of private companies were contacted via email and given a questionnaire developed based on the extant literature. The sample consisted of 105 individuals employed in the largest audit institutions in Greece. Data were analysed using multiple regression.FindingsAs expected, technological advances are indispensable for the establishment of an effective digital auditing system. The impact of data protection measures against cyber-attacks as well as employees' skills and training were found to be significant. Particular attention should be given to the preparation and building of virtual auditing teams.Research limitations/implicationsThe fact that the digital era is still nascent with its final outcomes not yet visible makes it difficult to produce accurate predictions and draw conclusions. Further, there is a need to survey salient stakeholders in other country contexts beyond Greece pursuant of producing generalisable results.Practical implicationsThe actions taken by companies to ensure cyber security and the formation of virtual teams were found to be highly significant for the implementation of a real-time auditing process. Traditionally, factors such as cost and time play an important role in optimising internal continuous auditing. Technological advancements combined with careful, strategic and case-specific implementation have the potential to enhance the efficacy of older methods.Social implicationsThe positive propensity of staff to adopt technology and modern techniques illustrates how implementation difficulties can be overcome through the redefinition and scheduling of an organisation's objectives and training of its personnel.Originality/valueAudit firm employees highlighted the protection of personal data, the avoidance of cyber-attacks and training as major continuous internal auditing goals. The results indicate acceptance towards technology and modern techniques, provided companies ensure adequate preparation and staff training conditions.

Hype or Hope: Digital Technologies in Auditing Process

“…Consistent with previous studies (Curtis & Payne, 2014;Chakraborty et al, 2008;Schwarzer, 2014), this study lends credence to the importance of technological, organisational and environmental factors, as noted through the findings. The move to industrial revolution 4.0 has brought about many emerging software/ applications/hardware to the auditors' working environment (Lois, et al, 2020;Dbouk & Zaarour, 2017). Such a situation may cause a "change" in the auditing process, and as a result, some aspects of judgments had become digitised.…”

Risk-based internal audit: factors related to its implementation

“…Understanding business objectives and strategies and aligning them with business objectives and activities (Coetzee and Lubbe, 2014; Selim and McNamee, 1999b), as well as assessing business risks on an annual basis and in individual audit assignments (Allegrini and D’Onza, 2003; Koutoupis and Tsamis, 2009) – that is, identifying, measuring and prioritizing the negative effects for the entity – contributes to an effective risk management that follows a holistic approach at the lowest possible cost (Bowling and Rieger, 2005; Banham, 2005; Busman and Zuiden, 1998; Goodwin, 2003; Griffiths, 2006; Gupta, 2011; Lois et al , 2020; McCord, 2002; Verschoor, 2002). Therefore, the focus of internal auditors is shifted to the future (Crawford and Stein, 2002; Petridis et al , 2019) and to “high-risk” areas that must be considered as a priority when preparing the internal audit plan (Grıffıths, 2006; Hafizah, 2017; Koutoupis and Tsamis, 2009; Sarens et al , 2012).…”

Impact of Information Communication Technology Competency Among Auditing Professionals

“…Recent advancement in IT is imperative for adoption of an efficient automated auditing system. The effect of data security procedures against internet hackers including audit assistants training and skills were found to be substantial [35]. Auditing through the computer guarantee fair financial representation, and the audit assistants were very well trained and fully competent for working in the ICT enabled auditing environment and those practice generally reduce audit risks and confirm good performance.…”