Audit Profession Research Articles

The interaction of blockchain technology, audit process, and the International Financial Reporting Standards

Purpose This study aims to provide a framework for the interaction of blockchain technology, the audit process and International Financial Reporting Standards (IFRS). Design/methodology/approach This study was conducted in three phases. In the first phase, a meta-synthesis method was used until 2020. Out of 87 papers, a total number of 15 were selected, and 72 were excluded after an initial screening. In the second phase, 11 interviews were held with experts with sufficient experience and expertise in blockchain technology, accounting and auditing. These interviews were held between 2020 and 2021. The sampling was purposive (targeted) in type, along with snowball sampling. In the third phase, a combination of questionnaire-based method and the fuzzy Delphi method was used. The research population for this phase consisted of accounting professors, members of the Iranian Association of Certified Public Accountants and accounting and technology professionals. Following the selection of the Delphi panel, 35 questionnaires were collected between 2021 and 2022 for analysis. Findings The results showed that in line with the interaction of blockchain technology, audit process and IFRS, 52 indicators were confirmed in eight components. Moreover, “Verifiability,” “Timeliness” and “Predictive value” were the most influential factors, respectively, according to the conceptual model. In addition, higher average scores of experts’ views were related to “Transparency audit reports” and “Increasing the quality of the auditor’s judgment”, respectively. Originality/value Blockchain is a complex subject, and there has been very little published research on the intersection of IFRS and blockchain technology. It is crucial for the audit profession and technology professionals to focus on the interaction of blockchain technology with the qualitative characteristics of information. This is an area that has not been thoroughly researched yet. The interaction of blockchain technology, improvements in the audit process and adherence to IFRS is a significant development in accounting and auditing.

Future auditing: Machine learning's impact on audit capacity stress - young auditors' perceptions using UTAUT

Advancing technologies have potential to revolutionize the future of auditing. This study investigates the impact of machine learning adoption on audit capacity stress among Indonesian external auditors. A survey approach was used to collect data from 100 auditors working in public accounting firms. The Unified Theory of Acceptance and Use of Technology (UTAUT) model was employed to assess factors influencing auditors' perceptions of machine learning usage. The result that comprises of young auditors to be the most respondents show performance expectancy, effort expectancy, and social influence are insignificant towards audit capacity stress. However, facilitating conditions were found to have a significant impact on audit capacity stress, suggesting that infrastructure and resource availability are crucial for young auditors' acceptance of machine learning and its audit capacity stress-reducing effects. Thus, Indonesian auditor requires additional facilitating support to alleviate audit capacity stress. These findings contribute to the understanding of technology adoption and audit capacity stress in the evolving future audit profession.

Sociological research methods with a differentiated approachin regional nursing

Background.In the professional audit of the quality of nursing care, sociological research methods are of particular importance in the context of the formation of skills and abilities, with the help of which a set of expert criteria is formed from the general set of practical activities. Taking into account that the selection of qualified elements requires information about the scientific approach, in proportion to the originality of the expert function, it is relevant to identify them more clearly in the examination, which allows correcting the process of training and retraining of personnel. Objective.Toevaluate the sociological research methods of regional nursing on the example of the Orenburg region. Materials and methods.The main criteria for evaluating the activities of medical workers using the Delphi method are presented. The examination performed by the method of sociological and expert survey of average medical workers (n=535), doctors (n=80), heads of medical institutions (n=10) and patients (n=500) allowed us to formulate formalized indicators for evaluating measures to create innovative training and retraining programs for nursing staff. Mathematical "sketches" of the programs are based on factorial/cluster/discriminant analyses. Results. Sociological research methods in regional nursing have sanctioned a set of parameters of the qualities of a specialist in his professional activity in the context of training and retraining of nursing staff. Conclusion. Mathematical prototypes of programmatic training of medical staff created on the basis of sociological research methods in regional nursing contribute to the algorithmization of improvements in the format of the content and quality of training in order to provide competent and competitive specialists for the industry.

PwC Involved in Evergrande Financial Scandal: An Ethical Crisis for the Auditing Profession?

This article discusses PricewaterhouseCoopers' (PwC) involvement in the Evergrande financial scandal and its implications for the audit profession. The scandal exposed PwC's failure to detect and report significant financial discrepancies that led to the collapse of Evergrande, one of China's largest property developers with more than $300 billion in debt. The findings highlight weaknesses in the audit process as well as a lack of effective regulatory oversight. PwC, as one of the Big Four accounting firms, faced severe sanctions in the form of a $62 million fine and a six-month ban on operating in China. The article also explores how the scandal exacerbated the loss of public trust in the auditing profession, which is perceived as failing to maintain the integrity of financial reporting. This analysis offers important lessons about the need to strengthen ethical rules, auditor independence, and accountability in the audit process. In addition, the research recommends reforms in oversight and corporate governance to prevent similar crises in the future. This article is expected to contribute to efforts to improve audit quality and restore public confidence in the global financial system.

Study on Audit Risk Model Based on Data Mining Algorithm

With the widespread application of modern information technologies such as big data, enterprises have generated a large amount of data in their daily operations. The traditional audit methods have drawbacks such as high cost and high consumption, and can no longer meet the needs of audit work in the digital era. Therefore, it is urgent to adopt audit methods suitable for the digital era to improve audit quality and reduce enterprise Audit risk. For professional auditors in enterprises, it is very important to utilize emerging technologies such as data mining algorithms. The audited enterprise may tamper with its financial statements, and identifying high-quality audit data from massive amounts of data is a huge challenge. Compared to traditional audit methods, data mining algorithms can significantly improve the efficiency and accuracy of audit work. For example, the BP neural network, with its powerful nonlinear mapping ability, can capture complex relationships in data; Support vector machines classify data by finding the optimal hyperplane in high-dimensional space and have good generalization ability; random forest reduces overfitting and improves prediction accuracy by integrating multiple decision trees; Association rule algorithms can discover interesting relationships between data items, helping auditors identify potential fraudulent behavior or abnormal transactions. Therefore, the purpose of this study is to accurately evaluate and reduce the audit risk of enterprises, and to build an audit risk model using computer data mining algorithms. This provides necessary reference and guidance for auditors to conduct data analysis and mine valuable data during the audit process of enterprises, thereby improving audit efficiency.

Utilising machine learning for corporate social responsibility (CSR) and environmental, social, and governance (ESG) evaluation: Transitioning from committees to climate

Transparency and accountability are critical components of corporate sustainability. This study uses machine learning and empirical analysis to examine the influence of corporate social responsibility (CSR) committees and environmental, social, and governance (ESG) initiatives on corporate sustainability. Using 2017–2021 Bloomberg Terminal data, we investigated the environmental footprints, disclosure practices, risk profiles, and ESG fund commitments of Fortune 500 companies. Key findings indicate that CSR committees positively impact environmental performance, with an increase in environmental responsibility over time. Policy implications highlight the necessity for collaboration to prioritize environmental sustainability and address climate risk disclosure auditing within the audit profession.

Effects of Applying Artificial Intelligence Techniques on the Audit Profession and the Audit Committee: An Empirical analysis based on a Field Study

Effects of Applying Artificial Intelligence Techniques on the Audit Profession and the Audit Committee: An Empirical analysis based on a Field Study

External Audit Quality and its Factors in Palestinian Municipalities: Moderating Effect of Supreme Audit Institutions

Objectives: The study aims to investigate the relationship between external audit quality and its factors (i.e., auditor characteristics, audit firm attributes, and effectiveness of municipal internal control), as well as the moderation effect of supreme audit institutions between external audit quality and its selected factors, as perceived by accountants and internal auditors in Palestinian municipalities. Methods: To achieve the objectives, questionnaires were distributed to 309 accountants and internal auditors in 155 Palestinian municipalities. They have firsthand knowledge of the financial statements under audit and are in constant communication with external auditors. Smart PLS 3 was used for statistical analysis. Results: The results revealed that the direct relationships between audit quality, auditor characteristics, and effectiveness of municipal internal control were positive. These relationships were also positively moderated by supreme audit institutions. The relationship between audit quality and audit firm attributes was also positive, but it was negatively moderated by supreme audit institutions. Conclusion: Audit firms, audit profession regulators, and municipality administrators can use these findings as useful guidelines in determining the factors of audit quality required in municipal audit engagements. This study encourages future research to examine other moderators, such as politics and public elections.

Societal Trust and Modified Audit Opinions: International Evidence

ABSTRACT This study examines how societal trust influences auditors’ likelihood of issuing modified audit opinions. Analyzing cross-country data, we find that auditors in countries with high levels of societal trust are less prone to issue modified audit opinions. Specifically, our findings indicate that this effect is moderated by formal audit-related institutions, such as heightened auditor liabilities, the presence of Public Company Accounting Oversight Board (PCAOB) inspections, and a more advanced audit profession. These results are consistent even when applying a difference-in-differences (DiD) approach. Further analysis shows that the moderating impact of formal institutions is more pronounced for clients operating domestically, clients of non-Big N auditors, and auditors with long tenure. Overall, our findings highlight societal trust as a significant informal institution influencing auditor opinions, with a complex interplay between this trust and formal audit-related institutions. The study offers important implications for policy, practice, and future research. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M40; M41.

Beyond Reliance: Internal Auditors’ Perceptions of Their Relationships with External Auditors

SUMMARY Based on a survey of 67 internal audit professionals, we examine the interactions between internal and external auditors and the experience internal auditors have working with external auditors. Specifically, we investigate perceptions of collaboration, interaction, contribution, and confidence with respect to internal-external auditor relationships. In general, we find a positive relationship between internal and external auditors. However, our results suggest that internal auditors see a lot of room for growth in the internal-external audit relationship and are looking for more opportunities to collaborate with external auditors. We discuss implications for both internal and external auditors in practice. JEL Classifications: M42.

A comparative analysis of remote auditing in Albania: How it affects the quality of enterprise auditing

This paper conducts an extensive examination to explore the impact of remote auditing on audit quality. It aims to ascertain whether remote audit processes can match or exceed the standards set by traditional on-site audits. The study encompasses various remote audit methods, advantages, and challenges. The study employs a mixed methods approach, gathering and analyzing data through both quantitative measures and qualitative techniques. This includes surveys directed at audit professionals to glean insights into remote auditing and its effects on audit quality. Survey findings are analyzed according to a balance scorecard. The findings indicate that remote auditing has the potential to deliver high-quality audits but requires robust technological infrastructure, effective communication channels, and rigorous data protection protocols.

Assessment Audit: How Artificial Intelligence Affected Audit Quality of Sustainability Report Based on Auditors Perspective

This study aims to analyze audit assessment and the effects of artificial intelligence on the audit quality sustainability reports from the standpoint of auditors who provide audit opinions on audits that are conducted of sustainable financial reports. Certain audit tasks can now be automated by the audit profession thanks to technology. Artificial intelligence (AI) and big data analytics can be used to analyze huge data, one of the technological innovations that need more study than conventional data. The number of 85 auditors of Accountant Public Firms in Medan completed questionnaires that were used in this study to gather data. Following the collection of data from respondents, quantitative descriptive methodologies were used to analyze the data. The audit profession may improve the quality of audits by promoting the use of AI and big data analytics and by supporting auditors in developing their skills to stay current with new technologies. AI can improve audit quality, reduce costs, and eventually replace human workers. People are still required in the audit process, though, as AI cannot make decisions when it comes to providing audit opinions on financial reports. As a result, its contribution to the audit process is minimal. Therefore, it is hoped that this study will shed light on the potential applications of AI in the auditing process.

Competence, Training, Professionalism, and Financial Rewards Shaping Students’ Career Choice as Auditors

This study addresses the increasing demand for competent auditors by exploring how competence, professional training, and audit professionalism influence accounting students' career interest in auditing. Despite previous research on career selection, the knowledge gap lies in understanding the role of financial rewards as a moderating factor. This research aims to assess the impact of these factors while considering financial rewards as a moderator. Using a quantitative approach, data was collected from 120 accounting students from the 2020 and 2021 cohorts at Muhammadiyah University of Sidoarjo. Results indicate a positive relationship between competence, professional training, and audit professionalism with students' interest in auditing. Financial rewards were found to moderate the relationship between competence and career interest, as well as audit professionalism and career interest; however, it did not moderate professional training. The novelty of this study lies in examining financial rewards' moderating role, offering new insights for academic institutions to focus on competence and professionalism enhancement. Highlights: The study identifies financial rewards as a key factor that can strengthen the relationship between competence and students' interest in auditing careers. Professional training does not show a moderating effect with financial rewards in influencing career choices. The findings suggest a focus on competence and audit professionalism development for better career motivation. Keywords: Interest, Competence, Professional Training, Audit Professionalism, Financial Rewards

PENGARUH KODE ETIK, PENGALAMAN KERJA DAN SITUASI AUDIT TERHADAP SKEPTISISME PROFESIONAL AUDITOR

This research aims to determine the influence of the Code of Ethics, Work Experience, and Audit Situation on the Skepticism of Professional Auditors at Public Accounting Firms in Tangerang. The population in this study were all auditors who worked at the Public Accounting Firm (KAP) in Tangerang with a sample size of 33 respondents. The sampling method used was the convenience sampling method. The data source used is primary data and the data collection method used is through a questionnaire distributed to auditors working in KAP in the Tangerang area. The analysis technique used is multiple linear regression analysis. Hypothesis testing uses the coefficient of determination test, F test, and T test. Data analysis uses SPSS version 29 software. The results of this study show that the code of ethics, work experience, and audit situation influence the professional skepticism of auditors.

Aversion to the use of foreign exchange hedging in state-owned enterprises: Evidence from China

Using a sample of state-owned enterprises (SOEs) listed in China from 2006 to 2017, we examine the impact of state ownership on foreign exchange (forex) hedging. We find that SOEs engage in forex hedging both less frequently and to a lesser extent than non-SOEs. These results are robust to a series of additional tests, such as difference-in-differences analyses, instrumental variable tests, and alternative explanation tests. The effect is particularly pronounced for SOEs with weaker internal controls, fewer professional auditors, and less marketization. We further find that the use of currency derivatives by SOEs hinders the promotion of managers. Furthermore, the prevalence of subjective performance evaluation in SOEs, as opposed to objective performance measures, affects managers' decisions regarding hedging, as evidenced by negative promotion–performance sensitivity when using financial derivatives. Overall, our study sheds light on the aversion of SOEs to forex hedging, providing insight into the conservative decision-making tendencies of SOE managers under political governance.

Remote Work in Audit Firms: A Systematic Literature Review and Theoretical Framework

The mass adoption of remote working technologies, facilitated by the COVID-19 pandemic, has permitted a transformation in the work of professional auditors. Where auditors previously worked long hours at the office or on the road near colleagues, remote work has created new work routines that are conducted alone at home. While home-based remote work may be a relatively new phenomenon for auditors, it is not a new phenomenon for knowledge workers in general. In this paper, we perform a systematic literature review across fields such as sociology, psychology, and management information systems to develop an organizing framework for the literature on remote work according to four primary dimensions: organizational factors, employee factors, job-level outcomes and the work-family boundary. From this organizing framework, we propose a theoretical model for how remote work can impact auditors in audit firms bringing in insights from the literature on the audit profession. Our theoretical model proposes that remote work will lead to changes in audit practices that will have implications at the client, employee and firm level. This theoretical model allows us to propose future avenues for research in this rapidly evolving area.

Pengaruh Persepsi Profesi dan Kesadaran Etis Terhadap Komitmen Profesi Akuntan Publik

A number of codes of ethics regulate how members of the public accounting profession are expected to behave. The problem of ethical violations that occur in the auditor environment is one of the things that needs to be considered, because it causes public trust in the public accounting profession to decline. The purpose of the written research is to find out: (1) how professional perception influences the level of commitment of the public accounting profession. (2) How ethical awareness influences the dedication of the public accounting profession. The written research is a survey research by distributing questionnaires to the sample directly. Participants in the written research were all auditors working at the Surabaya Public Accounting Office. The sample selected was 40 auditors with a simple sampling technique. Multiple regression analysis was used in the data analysis technique. The conclusion of the written research shows: (1) The commitment of the public accounting profession is significantly and positively influenced by public perception. The auditor's ethical awareness and dedication to the public accounting profession are positively correlated. The implications of the written research are in improving the skills, dedication, and professionalism of auditors working in public accounting offices so that they can provide services expected by the general public. This can be achieved by increasing knowledge in this field, which will influence the perception of the auditor profession. This can be done through training and discussions on the field of auditing.

Does Gender and Ethnic Diversity among Audit Partners Impact Office-Level Outcomes?

SUMMARY Accounting firms have invested significant resources in diversity initiatives related to recruiting, retention, and promotion. Audit regulators suggest these efforts can have positive repercussions on audit quality. This article summarizes the key findings by Condie, Lisic, Seidel, Truelson, and Zimmerman (2023) (CLSTZ) regarding the influence of a more diverse group of audit partners within an audit office on office-level outcomes. Specifically, CLSTZ examines whether gender and ethnic diversity among audit partners within an office influences audit personnel retention and audit quality. CLSTZ finds that greater diversity (greater changes in diversity) among an office's audit partners is associated with less (reduced) turnover among the audit professionals in that office and higher (increased) audit quality. These findings provide empirical evidence regarding the influence of a more diverse group of office audit partners on office-level outcomes and have important implications for accounting firms. JEL Classifications: M41; M42.

KEY DETERMINANTS OF GOVERNMENT AUDITOR’S BEHAVIOUR TO ADOPT BIG DATA ANALYTICS IN AUDIT PRACTICE

<p><strong>Background</strong>: Despite the increasing adoption of big data and Big Data Analytics (BDA) in the business world, the accounting and audit profession is considered slow in taking advantage of these innovative developments. Government auditors play an important role indirectly in improving good governance. The use of BDA in government audits has been carried out in Indonesia since 2020. However, because its use is not mandatory, not all government auditors use the application.</p><p><strong>Objective</strong>: This research investigates the key determinants that drive government auditors' behaviour to adopt BDA technology in audit practice, especially in the Indonesian context, with a focus on the Indonesian Supreme Audit Agency (SAA).</p><p><strong>Research Method: </strong>This study was conducted through a questionnaire survey involving 126 government auditors in Indonesia. Meanwhile, research data was analyzed using the Structural Equation Modelling - Partial Least Square method (SEM-PLS).</p><p><strong>Research Results</strong>: Research findings show that performance expectancy and effort expectancy have a direct influence on auditors' intentions to use BDA techniques at SAA. Meanwhile, the auditor's intention to use BDA techniques has a significant effect on Actual Use.</p><p><strong>Originality/Novelty of Research: </strong>This research addresses the gap about<strong> </strong>factors that encourage auditors' behaviour to adopt BDA technology in audit practice, especially in public sector context.</p><p> </p>

Carbon management accounting an evolving approach to enhance transparency and accountability in accounting and reporting practices

Purpose This study aims to examine the factors driving the adoption of carbon management accounting (CMA) and various considerations that mediate its effectiveness in accounting and disclosure practices. Design/methodology/approach This study used an exploratory, cross-sectional, quantitative design. Academics, managements/executives, professional accountants, professional auditors and researchers served as the primary units of analysis. This study used a survey method to gather data through a structured online questionnaire. The data were analyzed using descriptive statistics and partial least squares structural equation modeling (PLS-SEM). Findings The results revealed that the factors driving the adoption of CMA directly influence the effectiveness of CMA practices, with a significant mediating effect of regulatory and ethical aspects. Furthermore, this study revealed the difficulty of accounting, quantifying and reporting carbon emissions and revenue generation from the trading of carbon credits. This highlights the critical role of standard-setters and academics in deciding the concrete methodology to promote uniformity in carbon disclosures. Research limitations/implications The major limitations of this study are that it considered only the perception of experts and did not study the actual practices of CMA by considering companies that have already implemented CMA. Further studies should consider this aspect to validate the results of this study. Furthermore, the findings highlight the insignificant effect of economic, environmental and social aspects in enhancing the overall effectiveness of CMA. This is because of the limited number of factors considered in the study of such metrics. To overcome this limitation, future studies should consider wider aspects to validate the outcomes of this study. Practical implications The major contribution of this study is that it serves as a base input for business organizations, academics, researchers and regulatory authorities who are working to implement CMA strategies to reduce carbon emissions and promote net-zero business practices. Originality/value The outcome of this study is unique and new, as the subject matter of this study is in the nascent stage. The outcome of this study may become a significant valid input for regulators and policymaking companies to gain knowledge about CMA practices and motivate them to integrate CMA practices as part of their sustainability initiatives.