Audit Evidence Research Articles

A Review of Literature to Derive Best Practices for Big-Data Audits in Saudi Context

In 2014, leading scholars in the field of big data auditing outlined a research agenda to explore these impacts, setting the foundation for further investigation. This paper explores the impact of big data on audit evidence, particularly in the context of Saudi Arabia’s transition to a more diversified economy under Vision 2030. This paper also seeks to synthesize current research and establish best practices for auditors in Saudi Arabia, emphasizing the importance of adapting audit processes to a growing economy that increasingly generates vast amounts of data. In recent decades, auditing practices have undergone substantial transformation by broadening the scope of audit goals and incorporating diverse, non-traditional sources of evidence, such as unstructured data from social media or IoT devices. These new data sources, while increasing audit accuracy and depth, pose challenges regarding data reliability and integrity. Over the past decade, many of these research questions have been addressed, particularly in relation to how big data enhances auditors' abilities to detect fraud, improve audit quality, and provide more accurate risk assessments. By implementing AI algorithms and advanced analytics, auditors can gain deeper insights while also addressing key concerns such as data veracity, compliance with International Financial Reporting Standards (IFRS), and the guidelines set by the Saudi Organization for Certified Public Accountants (SOCPA). As Saudi Arabia's economy diversifies and becomes more data-driven, understanding and integrating big data into audit practices will be essential for maintaining high audit standards and supporting economic growth.

IoT as Audit Evidence: A Reasonable Assurance Framework

ABSTRACT This study examines the continuing expansion of the Internet of Things (IoT) and its possible development as a source of audit evidence for both internal and external audits. In other words, the auditor checks whether a measure (metric) related to classifying and prioritizing requests and/or incidents is available in the enterprise’s current incident reporting system. This approach uses Design Science Research and is based on the use of auditing standards and frameworks to drive the design of audit plans using metrics available on or derived from the enterprise IoT. This study extends the research on enterprise IoT and its potential application to the enterprise audit process. It provides a framework that illustrates how both internal and external auditors can reasonably assure the provenance and validity of enterprise IoT data while also evaluating the security and controls surrounding its production.

Digital Skills in Collecting and Interpreting Audit Evidence

Digital Skills in Collecting and Interpreting Audit Evidence

AUDIT DOCUMENTATION – AN IMPORTANT FACTOR IN FINANCIAL AUDIT MISSION

According to the latest updates of the International Standards on Auditing, the audit documentation represents the record of applied audit procedures, of the sufficient and appropriate obtained audit evidence and of the conclusions reached by the auditor. There is currently an increased interest in studying the documentation approach of the entire audit universe. In this context, the importance of the given paper lies in the need for continuous examination of the documentation related to the audit process as a whole. The research is based on the qualitative research method, which allowed the review of a series of important research on audit documentation and the study of related national and international regulations. The study reveals some of the determining factors of the quality of financial audit missions, which reside in the deep knowledge and correct operation of the regulations applicable to the audit documentation, including all the amendments made and the correctness of its preparation. Also, when preparing the audit documentation, the particularities of the performed audit stage, the specifics of the audited client, the nature and context of the applied procedures must be taken into account.

Determinan Factor On Behaviour Auditor Disfunction

Purpose: This research was conducted on Public Accountants in Indonesia. This study aims to investigate how Time Budget Pressure, Locus Of Control, Independence and Gender are related to Dysfunctional Behavior of Auditors in Indonesia Methodology/approach: Primary data collection method with questionnaire dissemination. Instrument trials use validity and reliability test methods. Test the data using model analysis, normality test, and model test. Test the hypothesis using SEM analysis. Findings: Based on the results of the study shows that there is a positive influence of Time Budget Pressure and Locus Of Control on the Auditor's Dysfunctional Behavior. However, there is no influence between independence and gender on the auditor's dysfunctional behavior. Practical implications: So that IAPI in audit training emphasizes more on case studies of timely completion of work, efficient allocation of audit time and evaluating appropriate audit evidence. Originality/value: There have been many studies in developed countries that discuss time budget pressure and locus of control for dysfunctional auditors, but there are still few studies in developing countries that discuss time budget pressure, locus of control, independence and gender on dysfunctional auditors.

Enhancing auditors’ professional skepticism through nudges: an eye-tracking experiment

This article studies whether nudges – that is, gentle alterations of people’s behaviour – increase audit quality. Although the utility of nudges is well-established in behavioural sciences, their applicability and efficacy have been less studied in accounting and auditing. To bridge this knowledge gap, the study extends nudge theory to financial audits, offering experimental evidence of the impact of social norms and justification nudges on auditor behaviour. A factorial 2 × 2 between-subject experiment (social norms and justification) shows that nudges amplify professional skepticism, a critical indicator of audit quality. A follow-up eye-tracking experiment involving an audit task identifies the underlying cognitive mechanism of this effect; nudges heighten auditors’ visual attention to pertinent information, thereby refining their evaluations of audit evidence and increasing their professional skepticism.

Behavioral aspects of auditor's professional judgment and professional skepticism

The paper examines the behavioral aspects of auditing in the context of auditor’s independence, auditor’s professional judgment, and professional skepticism. Over the past 50 years, in the researches of foreign scientists, the issues of accounting and auditing have been considered through the theory of behavioral accounting. On the other hand, in the studies of Ukrainian scientists, behavioral accounting in accounting and auditing was almost not considered. The main meaning of the theory of behavioral accounting is not to consider accounting and auditing exclusively in numbers, but to consider that accountants and auditors are people with a specific profession who behave according to their feelings and thoughts. It is customary to consider the concept of behavioral accounting according to the following topics: the influence of accounting information on behavior, management control, audit, ethics. Behavioral aspects of the auditor's independence, which are influenced by an auditor's personal prejudices and the auditor-client relationship, are studied. Auditor’s independence is considered in two dimensions - organizational independence and operational independence. E.g., independent auditors may face the problem of conflicting interests of the public and clients. Behavioral aspects of negotiations between the auditor and the client are also considered. The negotiation tactics used by the participants matter. It can be a yielding tactic, or a tactic of disputes. In particular, in the study of accommodating tactics, it was found that both auditors and clients reciprocated the accommodating negotiation tactics. There are many models of professional skepticism that have been summarized. Nelson and Hurtt's models are considered, the two fundamental components of which are professional skeptical judgment and professional skeptical action. Auditors should exercise professional skepticism, making judgments based on audit evidence without being influenced by clients.

Pengaruh Accounting Disruption Pada Kualitas Audit Dimediasi Beban Kerja Audit

This study aims to prove the effect of accounting disruption on audit quality with audit workload as an intervening variable at the Public Accounting Firm in Malang City. This research method uses quantitative research methods. This study uses primary data with data collection techniques through distributing questionnaires to 56 research samples using the convenience sampling method . The results of this study indicate that accounting disruption has a positive effect on audit quality directly and has a negative effect on audit workload. Audit workload has a negative effect on audit quality and there is an effect of accounting disruption on audit quality through mediation of audit workload. Changes in information technology in the field of corporate accounting make it easier for auditors to track audit evidence so as to improve audit quality.

THE EVIDENCE OF AUDITING AND IMPORTANT ASPECTS OF THE DOCUMENTATION PROCESS

There is presented in the article the findings, sugestions and recommendations for obtaining audit evidence, the quality of the organization’s data and the financial condition of the audited entity, as well as their documentation based on international standards.

Incorporating Triple Entry Accounting as an Audit Tool—Enhancing Modern Accounting Systems

Abstract: Despite the advancements in modern accounting systems, fraud remains a prevalent issue, necessitating extensive time and financial resources for audits. Integrating modern accounting ledgers with a public blockchain could facilitate easily verifiable accounting records, streamlining the audit evidence gathering and analytics process. Continuous audits could become feasible through readily available audit evidence from the public blockchain. The proposed audit solution aims to establish verifiable "Financial Fingerprints" (signed indexes) for each accounting entry, subsequently publishing them to specific addresses on the public blockchain. This initiative seeks to structure accounting ledgers in a Triple Entry Accounting format, where the third entry involves notarizing an index of each accounting entry on the public blockchain. The essence of Triple Entry Accounting lies in its atomicity, ensuring a single authoritative set of books. Any attempt to present an alternative set of books would be automatically detected. The approach to achieving this objective can be articulated through two value propositions. Firstly, Triple Entry Accounting offers a means to establish a provable official set of books, providing market access independent of network effects. Secondly, it aims to dismantle data silos by leveraging the blockchain as a shared ledger, thereby assisting auditors in efficiently gathering adequate audit evidence. With its standalone value proposition, Triple Entry Accounting offers benefits even before the network effect comes into play, leading to the development of an open standardized protocol for implementing it as an extension to modern accounting systems.

Technology-Based Forensic Auditing and Financial Crime Detection: An Empirical Analysis of Deposit Money Banks in Nigeria

The advent and rapid rate of technological development have prompted various fields of study to receive a new touch. One of those fields of study that has been revamped by the technological revolution is accounting. This study examined technology-based forensic auditing and financial crime detection: an empirical analysis of deposit money banks in Nigeria. The research design adopted in the study is the survey design. The survey design was adopted because the data for the study was extracted through the primary method of distributing questionnaires to the respective respondents. The population of the study is made up of the accounting staff of some selected deposit money banks in Abuja, Nigeria. The total population is made up of 58 persons. The method that was used in collecting data for the study was the questionnaire instrument. The questionnaire was distributed to the respondents to extract specific information in line with the objectives of the study. The method of data analysis that was used in this study is multiple linear regression with the application of the Ordinary Least Squares (OLS) technique. The findings of the study reveal that technology-based forensic auditing contributes significantly to financial crime detection in selected deposit money banks in Nigeria. The implication of this finding is that deposit money banks have already embraced and started applying technologically based forensic auditing in their financial crime explorations. It is therefore the recommendation of the study that auditors should stay abreast of the updates of other technological forensic auditing tools and step up their financial intelligence skills by embedding textual analysis in audit engagement to sharpen their skepticism for proper audit evidence and also favorably influence the technological forensic audit quality.

Determinants of financial statement fraud: the perspective of pentagon fraud theory (evidence on Islamic banking companies in Indonesia)

Purpose The purpose of this study was to determine the determinants of financial statement fraud: the perspective of pentagon fraud theory. Design/methodology/approach This study used quantitative methods with an explanatory research design by applying secondary data on Islamic banking companies listed on the Indonesia Stock Exchange (IDX). Findings External pressure affects financial statement fraud, ineffective monitoring affects financial statement fraud, external auditor quality affects financial statement fraud, change in auditor affects financial statement fraud, frequent number of CEO’s picture affects financial statement fraud, external pressure affects firm size, ineffective monitoring affects firm size, external auditor quality affects firm size, change in auditor affects firm size, frequent number of CEO’s picture affects firm size, firm size affects financial statement fraud, firm size mediates the relationship between external pressure on financial statement fraud, firm size mediates the relationship between ineffective monitoring on financial statement fraud, firm size mediates the relationship between external auditor quality and financial statement fraud, firm size mediates the relationship between change in auditor and financial statement fraud, firm size mediates the relationship between frequent number of CEO’s picture and financial statement fraud. Research limitations/implications The limitations of this research were found during the research process and can be used as input for further research and related parties in conducting the research to obtain better research results. The limitations of this study are as follows: this study only focused on Islamic banking, so it cannot be generalized to other sectors. Besides, this study only tested five independent variables, one dependent variable and one mediating variable. Practical implications For external auditors, financial statement fraud by management might be caused by many factors and is a social as well as an economic problem that must be addressed immediately. Therefore, in carrying out the duties and roles as an external auditor, they must have an attitude of independence (not taking sides) in the mental attitude that must be maintained by the auditor related to the assignment. Auditors must have sufficient technical expertise and training as auditors. In carrying out the audit, the auditor should use their professional skills in responding carefully and thoroughly. Moreover, in carrying out audit work, the auditor must have a plan, must know adequate internal control and obtain sufficiently competent audit evidence. Originality/value To the best of the authors’ knowledge, very few studies in Indonesia have applied the Beneish model. There is only one study that implemented the Beneish model, and the study examined only a few companies listed on the IDX. The findings of the present study have important implications not only for banks but also for users of financial statement accounts in Indonesia, especially for investors, auditors, regulators, taxation and other state authorities.

The Bayesian Approach to Audit Evidence: Quantifying Statistical Evidence Using the Bayes Factor

SUMMARY Statistical methods play an important role in auditors’ analyses of their clients’ data. A key component of the statistical approach to auditing is assessing the strength of evidence for or against a hypothesis. We argue that the frequentist statistical methods often used by auditors cannot provide the statistical evidence that audit standards advocate. In this article, we discuss an alternative approach that can provide this evidence: Bayesian inference. First, we explore the philosophical differences between frequentist and Bayesian inference. Second, we discuss misconceptions in the interpretation of frequentist statistical evidence. Finally, we show (as an alternative to the frequentist p-value) how the Bayes factor allows the auditor to obtain and interpret statistical evidence in line with audit standards. Thus, we contribute to audit theory and practice by showing how Bayesian inference can quantify audit evidence. Data Availability: The data supporting the findings in this article are available in the OSF repository at https://doi.org/10.17605/OSF.IO/WTN9G.1

Symmetrical and Asymmetrical Sampling Audit Evidence Using a Naive Bayes Classifier

Taiwan’s auditors have suffered from processing excessive audit data, including drawing audit evidence. This study advances sampling techniques by integrating machine learning with sampling. This machine learning integration helps avoid sampling bias, keep randomness and variability, and target risker samples. We first classify data using a Naive Bayes classifier into some classes. Next, a user-based, item-based, or hybrid approach is employed to draw audit evidence. The representativeness index is the primary metric for measuring its representativeness. The user-based approach samples data symmetrically around the median of a class as audit evidence. It may be equivalent to a combination of monetary and variable samplings. The item-based approach represents asymmetric sampling based on posterior probabilities for obtaining risky samples as audit evidence. It may be identical to a combination of non-statistical and monetary samplings. Auditors can hybridize those user-based and item-based approaches to balance representativeness and riskiness in selecting audit evidence. Three experiments show that sampling using machine learning integration has the benefits of drawing unbiased samples; handling complex patterns, correlations, and unstructured data; and improving efficiency in sampling big data. However, the limitations are the classification accuracy output by machine learning algorithms and the range of prior probabilities.

Research on Building System of Audit Evidence Integration Model Driven by Computer Big Data

The database, data warehouse, model base and knowledge base are initially conceived based on the existing audit decision support system, t. Standardize the data in the two aspects of database and data storage, transform all kinds of structured data into a general DSS supported data structure, and summarize the information required in the audit process and the circulating business data according to the four aspects of audit purpose, audit risk, audit evidence and audit importance. This provides data support for constructing pattern library and knowledge base. In the pattern library, the paper designs and stores common patterns, which breaks the situation that CPA relies on computer to make decisions in independent audit. Through the research of knowledge expression and reasoning mechanism, the existing examples and existing knowledge are converted into knowledge format that can be recognized by machines for easy use. The paper makes an empirical study on the audit decision support system of purchasing and payment.

Enterprise Audit Risk Assessment and Prevention based on AHP Analysis

If there are no auditing standards or auditing processes of big data, the audit risks of enterprises are increased. This paper first introduces the topic through the research background and literature review in order to ensure the integrity and accuracy of audit evidence to the maximum extent, and then analyses the causes of enterprise audit risk. When analysing the risk level of material misstatement, it is mainly the audit risk generated by the enterprise's unique business model, information system and financial management. Audit risk is mainly caused by the ability of auditors and audit process management. After quantitative analysis of the correctness of enterprise audit risk assessment indicators, this paper builds a multi-level comprehensive assessment model of enterprise audit risk on the basis of AHP analysis. At the same time, this paper puts forward specific measures to improve audit methods and audit processes and prevent audit risks in view of the actual problems encountered in the current audit risk of enterprises, so as to provide certain references for enterprise risk management and control.

Effect of audit client’s use of blockchain technology on auditing accounting estimates: evidence from the Middle East

Purpose This study aims to examine the effect of audit client’s use of blockchain (BC) on auditing accounting estimates (AEs), especially the inherent risk (IR), control risk (CR) and collection of audit evidence. Design/methodology/approach The study used a questionnaire to collect data for a sample of 249 auditors. A partial least squares method is used to test the hypotheses. Findings The results showed positive relationship between audit client’s use of BC and both IR and CR when auditing AEs. The results also showed the BC improves the collection of sufficient and appropriate audit evidence when auditing AEs. Research limitations/implications This study did not address all the risks associated with auditing AEs, including fraud, detection, sampling and nonsampling risks, and the procedures and tests for auditing AEs. Practical implications There are several implications of this research, including that it informs the revision of auditing standards and guidelines to correspond with successive technological changes, which subsequently clarify the roles and responsibilities of auditors, and the study findings will also cause changes to the design and form of audit procedures so as to obtain sufficient and appropriate audit evidence. Originality/value To the best of the authors’ knowledge, this study is considered the first of its kind that deals with the effects of audit client’s use of BC on audit AEs in the Middle East and North Africa region. This study also presented different sets of measures as proxies for measuring IR, CR and AE.

MAIN DIRECTIONS FOR IMPROVING ACCOUNTING AND AUDITING BANK LOANS

In auditing practice, there is a risk of not detecting significant misstatements in reporting even with a complete 100% audit of all business transactions. The main opportunity to minimize risk is, first of all, to increase the volume and accuracy of planned audit procedures and the amount of collected audit evidence. One of the promising areas for the development of modern audit technologies is its computerization.

AI and Auditing: Enhancing Audit Efficiency and Effectiveness with Artificial Intelligence

The use of automation and artificial intelligence (AI) in audit practice is increasingly becoming a major focus, with significant impact on the profession. This research depicts the current landscape of the use of AI in auditing, highlighting aspects such as automation and empowerment of the workforce in auditing, impact of AI on improving audit quality criteria, key factors in adopting AI-based audit techniques, impact of AI technology on audit evidence , and auditors' perceptions of AI in improving audit quality. The results and discussion show that while there are great benefits from integrating automation and AI in auditing, including improved audit quality, enhanced efficiency, and the ability to perform continuous audits, there are also challenges that need to be overcome, such as high customization costs for specific audit processes industry. The use of AI in auditing requires adaptation from auditors to changes in competencies and workflows to effectively utilize this technology. However, with proper understanding and careful handling of these challenges, AI has great potential to improve overall audit practices.

COVID-19 AND THE QUALITY OF AUDIT EVIDENCE: ASSESSING THE IMPACT ON AUDITING PRACTICES IN INDIA

COVID-19 pandemic was truly the striking booster for the surgical empowerment of Digital era and marketing. It revolutionized and transformed the B2B to B2C era. Although the awareness of Digital Marketing was buzzing in air before COVID-19, the visibility was certainly low. Few Top-rated brand corporates were progressively alert about its gravity-based largescale markets, big-size revenue, ensured that digital marketing would create a consumer-driven importance in a way ahead of bridging effective communication between consumers and businesses. Remote-and Hybrid working was the ultimatum in bringing more Online Business to the Marketing Managers onboard. The global consumers were highly influenced by trending digital campaigns and contents popped out on popular social digital platforms. Due to insufficient budget, startups were the first-time game changing players in markets who incessantly fought against all odds facing while developing the software on-demand. Extreme programming and Kanban made things possible and finally experts built viable interface for supporting efficient online infra through consumer-friendly apps and websites. The business corpus was entirely into online campaigns and held onto “Everything’s just ONLINE.” The data shows that out of many challenges, during the phase of COVID-19, 59% of some listed companies fueled their efforts on solving problems in areas of digital marketing and 66% of them finished of the task waiting for an ONLINE world that never was before. POST-COVID was full of new wave excitement, unlimited opportunities piled up for skilled digital marketers and service providers. The hiring process of these skilled content creators, digital marketing managers and online advertisers was just a culture shock in the new age digital era, however, “everything’s just Online” is the outstanding local to global trend in continuing.