Risk of Using Information Technologies in Cognitive Digital Audit

The audit risk model has become an extremely important element in audit practice. The basic intuition behind the model is that changes in risk should affect the work of the auditor. However, little systematic empirical evidence has been published on the assessment of audit risk and its effect on audit work. This study, using documentation from actual audits and follow-up interviews, provides such evidence. Assessments of audit risk and audit programme details have been obtained from eight clients of four Dutch audit firms. Audit risk assessments are obtained for two risk categories: (1) audit risk factors, such as the degree of client management turnover or the quality of the client's internal audit department; and (2) audit risk model variables (inherent or control risk), related to the account or assertion being audited. The results indicate that there is substantial variation in audit risk factors between clients and among the audit risk factors per client. To a lesser extent these findings hold for th...

Blockchain technology has become more common in the audit industry, posing new problems for traditional audit work. Researchers have been studying the effect of customers’ use of blockchain technology on audits, especially on audit risk and audit methods. This paper examines audit cases of Chinese enterprises that use blockchain technology. It analyzes the effect of the use of blockchain technology on the audit and the new audit problems. It also examines an Australian blockchain audit case using a questionnaire. This case study showed that the application of new technologies to the audit industry may lead to increased inherent risks and control risks. The audit methodology is uncertain and there are two possible approaches: (1) a combination of direct, indirect, account-level, and entity-level evidence and (2) an increase in indirect and entity-level evidence. This paper puts forward the reference case of the Australian blockchain audit experience and suggestions for developing blockchain audits in China.

This study addresses the research gap concerning the factors influencing Audit Risk in Public Accounting Firms, particularly the limited empirical evidence on the roles of Information Technology and Facilitating Conditions. Audit risk arises when auditors issue inappropriate opinions on financial statements containing material misstatements, which can undermine financial accountability and stakeholder trust. This research investigates how Information Technology and Facilitating Conditions affect Audit Risk in Public Accounting Firms located in Central Java. Using a descriptive quantitative approach, data were collected via structured questionnaires from 60 purposively selected auditors with a minimum of three years of experience across various audit engagements. The variables measured include components of Audit Risk (Inherent Risk, Control Risk, Detection Risk), Information Technology (use of AI and cloud computing), and Facilitating Conditions (knowledge, resources, compatibility, and ease of use). Data analysis was performed using SPSS software, incorporating validity and reliability tests, as well as classical assumption tests such as normality, multicollinearity, autocorrelation, and homoscedasticity, followed by multiple linear regression analysis. The findings reveal that Information Technology has a negative but statistically insignificant effect on Audit Risk, while Facilitating Conditions exhibit a positive and significant influence. Collectively, both variables significantly impact Audit Risk. These results highlight the critical role of organizational support systems in mitigating audit risk, suggesting that improvements in facilitating conditions may be more influential than technology adoption alone in the context of auditing practices.

In this paper, the authors examine how different types of fraud in most Information Technology (IT) environments affect an audit risk model from 2001 through 2008. Variations in IT fraud are questionable for determining the audit risks that affect audit quality and report. The data sources in this study came from the Computer Crime and Security Survey report (CSI) 2008. By relating different IT fraud to audit risk components through trend analysis in IT fraud improvements from 2001 to 2008, the authors measured declined percentages for control risks, inherent risks, and detection risks. They found that an improvement in control risks has been achieved up to 52.80%, 43% for detection risks, and 14% for inherent risks. An overall improvement in audit risk is 47.5%, which is a considerable development in audit quality. The study shows that progress in detecting IT fraud positively reduced audit risks and has significantly increased the audit quality since 2001.

Technology investment is important for a company, especially in the era of the industrial revolution 4.0 and 5.0. which both emphasize the importance of utilizing information technology and its users to increase competitive advantage. Optimum utilization of information technology will have an impact on reducing audit risk through the effectiveness of the internal control function. This study aims to analyze whether information technology capabilities affect audit risk and internal control quality in banking companies listed on the IDX during the 2019-2022 observation. The data sources used in this analysis use secondary data sourced from financial reports and annual reports of banking companies. Samples were selected based on predetermined criteria. The data analysis technique is panel data using Eviews 9. The test results show that 1) Information technology investment has a significant effect on audit risk, 2) Internal control moderates the effect of information technology investment on audit risk. 3) ROA as a control variable has no influence on audit risk.

The modern world cannot be imagined without a massive introduction of information and communication technologies. The implementation of innovative digital technologies led to a digital transformation of entire industries. It was no coincidence that there emerged a term "digital economy", denoting economic sectors, in which use the most advanced information and communication technologies. Industry 4.0, financial technologies are the clear confirmation of the digital transformation of the economy. The main innovative directions in the field of information and communication technologies are cloud computing, Blockchain technology, processing and analysis of big data technology, the use of neural networks. One of the leaders in the field of implementing innovative digital technologies is financial institutions that are the second largest investor in IT projects after telecommunications companies. Today, cloud computing is the most popular innovative technology in the banking sector. The paper analyzes the prospects for adopting cloud technologies in Russian and foreign financial institutions. The research on the financial performance of the world market of cloud computing is conducted. The scope of cloud computing application in financial institutions is considered. Moreover, the comparative analysis between Russian and foreign banks, as well as in the financial sphere of the BRICS countries is carried out. The advantages for financial institutions when implementing cloud technologies are examined. Obstacles in adopting of cloud computing in the Russian financial institutions are investigated.

This research aims to find out how much influence audit risk and work stress have on the motivation of auditors at the Padang City Public Accounting Firm. In this research, the population is all auditors in public accounting offices in Padang City. The population in this study was 92 people consisting of several employees who had different positions/groups in KAP Padang City. The sampling method used was the accidental sampling method. The regression analysis carried out was multiple linear regression analysis. The research results obtained based on the partial test (t test) showed: (a) The audit risk variable has a positive and significant effect on auditor motivation. (b) The work stress variable has a positive and significant effect on auditor motivation. Meanwhile, the simultaneous test of audit risk and work stress has a positive and significant influence on auditor motivation. Auditors may be motivated by the challenge of performing high-quality audits in the face of increased audit risk. These challenges can provide a sense of accomplishment and satisfaction for auditors who successfully navigate risks and complete high-quality audits. The stress faced in challenging work situations can motivate individuals to try harder and challenge themselves. When someone feels that they can overcome or cope with a difficult task, this can increase their motivation to succeed.

As investors and companies become more accustomed to crossing national borders to invest or raise capital, interest in comparing international and national accounting and auditing standards is growing. Compares two concepts crucial to planning and performing the audit work: audit risk and materiality. Differences between international and US guidance would imply that the two sets of standards require different levels of audit work; this situation would be a concern to investors and auditors. Similarities in the international and US standards would suggest consensus regarding the levels of work. Shows that the comparison of ISA 6 to SASs 47 and 55/78 indicates many similarities and few differences between international and US guidance.

감사인은 감사업무를 수행하기에 앞서 감사대상회사의 감사위험을 평가하고 평가한 내용을 토대로 감사계획을 수립해야 한다. 이때 감사위험이 높게 평가된다면 감사인은 감사위험을 수용 가능한 수준으로 낮추기 위한 감사증거를 수집하기 위해 추가적인 노력을 투입할 것이다. 상장폐지 가능성이 높다는 것은 감사위험을 증가시키는 요인으로 작용할 것이다. 감사인은 상장 폐지 가능성이 높은 기업을 계속기업으로서의 존속가능성이 낮다고 판단하여 목표감사위험을 낮게 설정할 가능성이 있다. 또한 2005년 집단소송제도가 도입됨에 따라 부실감사로 인한 책임소송에 직면할 가능성이 증가하여 상장폐지 가능성이 높을 경우 감사인은 소송위험이 크다고 인식할 것이다. 이에 따라 감사인은 상장폐지 가능성이 높을 경우 목표감사위험을 달성하고 높은 소송위 험을 낮추기 위해 추가적인 감사노력을 투입할 것으로 판단된다. 증권거래소는 상장된 기업 중 상장폐지 가능성이 높은 기업을 관리종목으로 지정한다. 따라서 감사인은 관리종목 기업을 감사할 경우 낮은 목표감사위험을 달성하고 높은 소송위험을 낮추기 위해 내부통제 평가절차 확대, 경영진과의 면담 증가 등의 추가적인 감사업무를 수행할 가능성이 있다. 이는 감사인이 충분하고 적합한 감사증거의 수집에 투입하는 노력을 증가시켜 감사보고시 차를 증가시킬 것이다. 이러한 배경에서 본 연구는 관리종목 편입이 감사보고시차에 미치는 영향을 분석하였다. 분석결과 관리종목 기업일수록 감사보고시차가 증가한다는 가설이 지지되었다. 이는 감사인이 관리종목 으로 편입될 경우 해당기업의 감사위험을 차별적으로 인식하여 감사업무를 수행한다는 것을 의미 한다. 본 연구는 감사투입노력의 대용치로 감사보고시차를 사용하여 분석했다는 점에서 선행연구와 차별점을 가진다. 또한 본 연구는 관리종목 지정에 대한 감사인의 대응을 살펴봄으로써 감사인 관점에서 관리종목 지정제도의 유용성을 확인하였다는 점에서 정책적 시사점을 제공할 것이다.The purpose of this research is to examine the effects of including administrative issues on the lag of audit report. The auditor establishes overall plans of audit before starting the auditing. Then, the auditor should evaluate the audit risk of the company subject for auditing and establish the auditing plan based on the evaluation results. The auditor judges the company with high possibility of delisting as low viability and could set the target audit risk as low. Moreover, after introducing the class action system in 2005, the auditor faces more risk of liability suit in case of poor auditing. Under this circumstance, if the auditee company has high possibility of delisting, the auditor gets more risk of facing a lawsuit. Namely, if possibility of delisting is evaluated as high, the auditor would input additional efforts in the auditing in order to collect audit evidences for the purpose of lowering the audit risk to an acceptable level. The company designated with administrative issues has high possibility of delisting. Therefore, the auditor may plan additional audit works such as expanding internal control evaluation procedure or increasing interviews with the management in order to accomplish the low target audit risk and decrease the high risk of getting lawsuit when auditing the company in administrative issues. This will increase the hours devoted to the audit work and delay audit completion time. Based on this background, this research analyzed the effect of administrative issues on the lag of audit report. The hypothesis that a company in administrative issues increases lag of audit report is supported by empirical results. This means that the auditor recognizes the company included in the administrative issues as risky for auditing when he or she conducts audit work. The audit hours used as a substitute measure of audit efforts in the preceding research has a problem with reliability since they were recorded by the subjective determination of the auditors. Since the audit report date is stipulated on the accounting audit standard, the lag of audit report is regarded as more reliable measure for the audit efforts. This research may be significant that it tries to secure the validity of results in terms of using the lag of audit report as a substitute measure for the audit efforts.

This article is devoted to the issues of effective application of advanced information and communication technologies in the insurance activities of the Republic of Uzbekistan. The author, using the example of the “Ishonch” insurance company, shows that in the modern period in the Republic of Uzbekistan the quality of the provision of insurance services is improving, as well as their quantitative indicators are growing.Purpose. The purpose of this article is to scientifically substantiate the place and role of advanced information and communication technologies in the provision of insurance services in the economic market, as well as the development of the insurance sector in the context of the development of the digital economy.Materials and methods. In the course of preparing the material for this article, the methods of system analysis, economic and mathematical methods and models, special methods of working with information systems and computer networks of various levels were used. All materials of the article are based on the use of factual material of the insurance company “Ishonch” of the Republic of Uzbekistan.Results. The article presents the author's approaches to the development of a distributed management system for the web resources of an insurance company in the global computer network of the Internet, it is proved that in the modern period the effectiveness of the functioning of insurance companies in the economic market depends on the degree of implementation of advanced information and communication technologies in their activities.In this paper, it is emphasized that the use of advanced information and communication technologies is of great importance in the development of insurance activities. In particular, the author emphasizes that the development of insurance services is achieved both by the development of existing software products, and by the development of new technological, software and information solutions based on the introduction of digital technologies.This paper shows that an information system is of great importance for the effective functioning of an insurance company, which includes a complex of interrelated subsystems providing the effective functioning of an insurance company in the economic market.Particular importance in this article is given to the use of the global Internet network. The author noted that the web representation of the insurance company on the Internet and the use of platform solutions and cloud technologies play a large role in the company's activities. In addition, the article tells about the fact that recently in the insurance business, electronic business is becoming widespread, which allows you to link together all participants in the insurance market.Conclusion. The material of this article shows that in the modern period in the insurance activities of the Republic of Uzbekistan there is a continuous process of introducing advanced information and communication technologies, contributing to the development of both the insurance sector itself and all participants in the economic market through the use of information systems, technologies, software products and new electronic services being introduced.The article notes that modern insurance companies, thanks to the development of advanced information and communication technologies, work with their clients directly, which creates benefits for both clients and insurance companies. In general, this article shows that the development of insurance activities in modern conditions is unthinkable without the use of advanced information and communication technologies and the adoption of competent management decisions.

This study introduces the Audit Risk Sentiment Value (ARSV), a novel audit risk proxy that leverages sentiment analysis to address limitations in traditional audit risk measures such as audit fees (LNFEE), audit hours (LNHOUR), and discretionary accruals (|MJDA|). Traditional proxies primarily capture quantitative dimensions, overlooking qualitative insights embedded in audit report narratives. By systematically analyzing sentiment and tone, ARSV captures nuanced audit risk dimensions that reflect the auditor’s risk perception. The study validates ARSV using a dataset of South Korean firms listed on the KOSPI from 2018 to 2023. The results demonstrate the ARSV’s superior explanatory power, as confirmed through the Vuong test, showing consistent performance across binary and continuous measures of explanatory language. ARSV bridges the gap between qualitative and quantitative audit risk assessments, offering significant benefits to auditors, regulators, and investors. Its ability to enhance the interpretability of audit reports improves transparency and trust in financial reporting, addressing stakeholder demands for actionable, forward-looking information. Furthermore, ARSV aligns with global trends emphasizing sustainability and accountability by integrating qualitative insights into audit practices. While this study provides robust evidence supporting ARSV effectiveness, its focus on South Korean firms may limit its generalizability. Future research should explore ARSV application in diverse regulatory and cultural contexts and refine the sentiment analysis tools using advanced machine learning techniques. Expanding ARSV to include other unstructured data, such as management commentary, could further enhance its applicability. This study marks a significant step toward modernizing audit methodologies, aligning them with evolving demands for comprehensive and transparent financial reporting. The empirical analysis reveals that ARSV outperforms traditional audit risk proxies with significantly higher explanatory power. Specifically, ARSV achieved a pseudo R2 of 0.786, compared to 0.608 for LNFEE, 0.604 for LNHOUR, and 0.578 for |MJDA|. The Vuong test results further validate ARSV superiority, with Z-statistics of −12.168, −12.492, and −9.775 when compared against LNFEE, LNHOUR, and |MJDA|, respectively. The model incorporating ARSV demonstrated a 62.454 F-value and an Adjusted R2 of 0.599, highlighting its robustness and reliability in audit risk assessment. These quantitative metrics underscore ARSV’s effectiveness in capturing qualitative audit risk dimensions, offering a more precise and informative measure for stakeholders.

With the development of digital technology, most familiar processes are changing. Without information technology, it is already impossible to imagine either medicine or the field of education. Big data and artificial intelligence come to almost every area of society, everything around is becoming “smart”. According to the forecasts of the participants of the St. Petersburg International Economic Forum, held in 2019, the global market for products using artificial intelligence and advanced information technologies can grow by almost 17 times by 2024. A national strategy for the development of technologies in the field of artificial intelligence and information technologies has been prepared in the Russian Federation, and a detailed action plan has been integrated into the national program “Digital Economy”. Digitalization today covers almost all aspects of the interaction of the citizen and business with authorities. Digitalization of business processes takes place, technologies are introduced into the activities of industrial enterprises, in the organization of public services and financial institutions. Aim. Consider the technology of blockchain, its origin, advantages and disadvantages, as well as the possibilities and prospects of using this technology. Materials and methods. As part of the materials and methods, one should point to an analysis of the theoretical foundations of the blockchain technology, the practical results of its implementation and use in various fields of activity: from public life to business. Since it is blockchain technology that occupies a special place among the promising information technologies and is increasingly used in business, as well as government, and will undoubtedly affect the familiar picture of the world, how the Internet has changed the world of information exchange in its time. Results. The article makes an attempt to assess the origin, current state, the possibilities of using blockchain technology, as well as its impact on traditional business processes and socio-economic transformation as a result of the digitalization process. Conclusion. It is believed that blockchain technology can be a real breakthrough in the field of finance, secure databases and the reliability of certain facts. For the largest foreign and domestic companies, this is not just a concept from an approximate future, but now it is part of the business, and the future life of society as a whole depends on how well it is to use and manage blockchain technology.

PurposeThough assurance services framework has been defined in the Auditing Standards, the understandability of the concept of reasonable assurance are varied by different auditors. The audit risk model (ARM) that is being used on a worldwide basis to underpin the audit risk of companies, is often being criticized. The purpose of this paper is to assess auditors' perceptions of reasonable assurance in audit work and the effectiveness of the ARM.Design/methodology/approachThree independent variables are examined: CPA certification, ranks of auditors and gender for their influence on two dependent variables: the perceptions of reasonable assurance in audit work and the effectiveness of the ARM. MANOVA analysis and follow up Discriminant Analysis are employed.FindingsResults reveal that there are significant differences between the perceptions held by auditors of different ranks regarding reasonable assurance in audit work. Partners entertain higher perceptions of reasonable assurance than staff auditors. The “gender” variable does not have an influence on the two dependent variables. Auditors with CPA certifications have higher perceptions of reasonable assurance. There are no differences in the perceptions ratings by different rank of auditors, gender and CPA certifications on the effectiveness of the ARM. The three independent variables have average high‐mean ratings on the effectiveness of the ARM, confirming that the current ARM still can provide an effective assurance.Originality/valueThis empirical study revokes the UK study and The Netherlands study. Immediate attention need not be focused on restructuring the ARM. Future contemplation of other important issue such as auditor independence may be considered.

The implementation of accounting computerization has greatly improved the speed and accuracy of accounting information processing, which is an unprecedented leap in the history of accounting development. However, the popularization and application of accounting computerization are bound to affect audit work; the traditional audit has been unable to adapt to the new situation and new requirements of computerization. Accounting computerization promotes the change of audit theory, technology, and method, but at the same time, it also causes new situations such as computer fraud, brings new audit risks, and puts forward higher requirements for auditors. This paper discusses the influence of accounting computerization on audit work and puts forward some suggestions and countermeasures for the existing problems of audit work under the condition of computerization.

Information and communication sector (ICT) is persistently transforming the manner of computing and provisioning of the Information Technology (IT) services and applications. Subsequently, the complexity, niceties and intricacies of the prevalent internet services and applications are also growing as well as changing. Eventually, cloud computing has emerged as one of the leading ICT innovations that has gained momentous importance owing to its benefits. Currently, blockchain technology is earning utmost prominence in the IT industry. The efforts are being initiated to merge the capabilities of both the cloud computing and blockchain technologies and yield utmost benefits from a collaborative work on these technologies. This paper attempts to lists the backend details for the technologies and discusses the benefits of them.KeywordsBlockchainBitcoinCloud computingCryptocurrencySecurity