The state of analytical procedures in the internal auditing as a corporate governance mechanism

Abstract

Internal auditors are facing today's fast-paced business conditions that challenge them to implement adequate information technology and use analytical procedures as key audit techniques. Continuous technology improvement enables the development and application of analytical procedures that were unimaginable in the time of 'paper-based auditing'. The research idea is to investigate the level and improvements of analytical procedures by internal auditors working in contemporary business conditions in Croatia. Given that the advancement of technology supports the application of complex analytics, the investigated problem includes an analysis of coherence between available technology and applied analytical procedures. The importance of using analytical procedures can be confirmed by the positive effects these procedures have in internal auditing as they increase its effectiveness and efficiency. In relation to this, the research also includes an investigation of the level, differences and complexity of analytical procedures used in internal audit in order to determine the current state of and prospects for improving the effectiveness and efficiency of internal audit activity in Croatia. Considering the purpose and possibilities of analytical procedures, the research examines the extent to which, measured by the analytical procedures application level, internal audit functions in Croatia are adapting to contemporary business conditions and changing professional processes. The research issues are analyzed by using the theoretical overview, guidance provided by professional institutions, and the importance that internal auditing has as a corporate governance mechanism. The research will provide insights into whether and to what extent the required methodology is respected

The importance and differences of analytical procedures' application for auditing blockchain technology between external and internal auditors in Croatia

“…Additionally, there is no official register of certified internal auditors in Croatia. Available data from 2018 shows that 275 entities in Croatia had established an internal audit function (Je zovita et al, 2018). Although this research focuses on the internal auditor as an individual, rather than internal audit as a function as a test variable, almost 70% of internal audit functions in Croatia employs 1-2 internal auditors (Je zovita et al, 2018), and by that the number of functions can be considered as a relevant population.…”

“…Application of APs in the process of external and internal auditing improves the effectiveness and efficiency of auditing activities (Appelbaum et al, 2017;Cangemi, 2016;Chan & Kogan, 2016;Je zovita et al, 2018;Lambrechts et al, 2011;Li et al, 2018;PwC, 2018b;Teeter et al, 2010), and consequently companies' business operations. With the implementation of BCT into the companies' business operations (Cangemi & Brennan, 2019;Deloitte, 2017;Wang & Kogan, 2018;Zhang et al, 2020), the usefulness, advantages and application opportunities of APs for external and internal auditors are coming to the fore.…”

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

“…Successful adoption of audit analytics can also be tested in contingency theory approaches. Many contingent theoretical factors explaining the analytics adoption process are implicated in the technology implementation process, the factors of which are quite influential in adoption (Auchey, 2020;Ježovita et al, 2018;Lois et al, 2020;Newman et al, 2021). Of these, technology ease-of-use factors predominate (Awua et al, 2021;Barahona et al, 2014;Behl et al, 2019;Davis, 1985;Pedrosa et al, 2019;Tolf et al, 2020).…”

Audit in ensuring the effectiveness of tourism management

“…The efficiency of tourism enterprise management, as well as its economic efficiency and investment attractiveness increase if they are based on the results (or use the results) of synergy of internal and external audit (Ježovita, Tušek, Žager, 2018;Nazarova, Zaremba, Kopotiienko, Mysiuk, 2018). It has become a kind of logical answer, an innovative approach to solving certain problems and shortcomings of internal and external audit.…”