Audit Process Research Articles

How does the Chinese digital transformation of enterprises affect the auditor switch?

The digital transformation of enterprises has brought great changes to the audit service demand of enterprises and the audit service supply of auditors. Therefore, there is a pressing need to study the digital transformation of enterprises and its impact on auditor switch. This paper aims to explore the influence of enterprise digital transformation on auditor switch and its potential implications for improving auditor efficiency. Using Python's machine learning tools and text analysis methods, This paper measure the digital transformation of Chinese listed companies and study the impact of digital transformation on the frequency of auditors witches. Our findings suggest that companies that have undergone digital transformation have reduced the frequency of changing auditors by alleviating information asymmetry, enhancing the effectiveness of companies' internal controls and increasing audit fees. This unique measurement mode of digital transformation provides new evidence for the relationship between the audit service demand of enterprises and the audit service supply of auditors under the digital transformation environment. The research can assist businesses in understanding how digital transformation affects auditing professionally and in improving their audit processes accordingly.

Determinants of Internal Audit Effectiveness in Local Government Authorities (LGAs): Evidence from Morogoro Region of Tanzania

This study examines the determinants of internal audit effectiveness in Local Government Authorities (LGAs), addressing the growing importance of robust Internal Audit Function (IAF) in public sector governance. The study employed the descriptive research design based on a mixed research approach integrating both qualitative and quantitative approaches. Data were collected from 45 purposively selected respondents with extensive auditing experience. A multiple linear regression model was used to assess the impact of these factors on internal audit effectiveness. The empirical results indicate that the four factors account for 65.7% of the variance in internal audit effectiveness, with IT utilization being the most significant contributor (R² = 0.657, Adjusted R² = 0.616). The ANOVA results further validate the model, showing a statistically significant F-statistic of 3.2976 with a p-value of 0.001, indicating the robustness of the findings. Top management support was found to be critical in fostering a culture of accountability, while the independence of internal audit ensures objectivity and unbiased assessments. IT utilization was identified as a key driver in enhancing the efficiency and reliability of audit processes. Finally, the competence of internal auditors was shown to significantly influence the quality and accuracy of audit outcomes. The study recommends the need for institutionalizing top management support, safeguarding auditor independence, advancing IT utilization, and promoting continuous professional development for auditors. These measures are essential for improving governance and accountability within LGAs, thereby contributing to more effective and reliable internal audit practices.

The assessment of wemaps audit requirements based on deep learning

ABSTRACT As a specialized map product, Wemaps must comply with relevant laws and regulations. Map audit plays a crucial role in ensuring map quality by preventing the production and dissemination of problem maps, as well as safeguarding national sovereignty, security, and interests. The user base for Wemaps is diverse, encompassing various types of maps, vast amounts of map data, and high expectations for timely dissemination. However, the current map audit process is inefficient and burdensome, failing to meet the specific needs of Wemaps audits. The key to solving this problem lies in the ability to automate and rapidly assess the audit requirements of Wemaps, approving those that require audit and promptly releasing those that do not. This study aims to establish an automated Wemaps audit assessment model using convolutional neural networks and transfer learning methods. By doing so, the burden of map audit can be reduced, and dissemination efficiency can be improved. The main contributions of this study are as follows: (1) Establishment of a dataset for assessing Wemaps audit requirements. (2) Utilization of VGG16 and ResNet50 neural network models for assessing Wemaps audit requirements; (3) Development of an optimal Wemaps audit assessment model through various experiments and training methods. (4) Analysis of factors influencing audit assessments based on measurement indicators and visualized results of the model. The experiments demonstrate that this method achieves high accuracy and can provide assessment services for public map audit requirements.

Towards Better Financial Governance: The Urgency of Model Risk Management in Indonesia Viewed Through Maqashid Shariah

This study assesses the adequacy of Model Risk Management (MRM) frameworks within Indonesian Islamic banking by utilizing Maqashid Shariah principles as a tool to align these frameworks more closely with global standards, specifically focusing on safeguarding life (Hifzh Al-Nafs) and property (Hifzh Al-Mal). Through a comparative literature review, this research examines the structure and effectiveness of MRM practices in Indonesia, referencing regulations such as POJK 65/2016 and SEOJK 25-SEOJK.03-2023, against those in developed financial markets such as the USA, UK, Europe, Japan, and UAE, with an emphasis on governance, lifecycle management, and internal audit processes. The findings suggest that Indonesia’s current MRM frameworks are somewhat rudimentary when contrasted with international norms. Key areas identified for enhancement include expanding the scope, enhancing governance structures, refining model lifecycle management, and strengthening internal audits and oversight mechanisms. By employing Maqashid Shariah principles as an analytical tool, this paper proposes enhancements to MRM frameworks that can significantly improve the stability and compliance of Islamic banks in Indonesia, promoting greater global competitiveness and adherence to Shariah principles. This approach not only integrates traditional MRM approaches with Islamic ethical standards but also provides a tailored framework for regulatory enhancements that support a stable, compliant, and ethical Islamic banking environment.

Fishing event detection and species classification using computer vision and artificial intelligence for electronic monitoring

Fisheries regulations require detailed catch reporting on commercial fishing vessels. Vital components for the sustainable management of fish stocks include a robust estimate of the number of fish caught and the species composition. Catch recording is often done manually by human observers on fishing vessels. Human observers are costly, and consistent data streams can be subject to observer availability and the weather. On-vessel cameras (electronic monitoring, EM) are a growing alternative to human observers. However, on-land human auditors are required to review hundreds of hours of videos recorded during fishing trips that can last for weeks. In this paper, a framework is presented to automatically detect fish in EM videos, count the total fishing events, and classify the fish species. For this purpose, a deep learning and computer vision-based model is developed to efficiently detect fish and fishers onboard a vessel. Secondly, a vision-based tracking pipeline tracks the detected fish and counts the total fishing events in the videos. Thirdly, the extracted fishing events are classified through a deep learning-based fish species classifier, to provide the distribution of different fish species caught for a fishing trip. For our experiments, the datasets were prepared using the electronic monitoring data of multiple fishing trips of a fishing vessel. The videos were recorded on Australian longline vessels targeting tunas and billfish. For the fish detection task, video frames were extracted and labelled manually to provide a digital ground-truth. For the fish species classification task, hundreds of fish images of multiple species were cropped to provide a training dataset for the fish classifier. For the fish counting task, manual counts for the fishing events of individual fish species were generated for the test fishing trips. The developed fish and fisher detector achieves a mean Average Precision of 87.0 % for fish and 94.0 % for fishers on test video frames. The fishing event detection pipeline achieves an Average Precision of 81.0 % and an Average Recall of 74.5 % on test videos. The fish species classifier achieves an Accuracy (Top-1) of 91.11 % for the classification of cropped fish images and 89.05 % for the classification of extracted fishing events from the videos. Experimental results show that our proposed computer vision and artificial intelligence-based solution for video analysis has great potential to automate the auditing process from electronic monitoring footage and contribute to the sustainable management of fish stocks.

PENGARUH PENGUNGKAPAN HAL AUDIT UTAMA, UKURAN PERUSAHAAN, DAN PROFITABILITAS TERHADAP AUDIT REPORT LAG

Auditors will need to note any major problems found during the audit in 2022 when the Audit Standard on disclosing important audit items is implemented. This process of identifying significant issues affects the audit completion time. In addition to key audit matters, company size and profitability also influence the duration of the audit. This study aims to analyze the impact of disclosing key audit matters, company size, and profitability on audit report lag. The method applied is multiple regression analysis on companies listed on the Indonesia Stock Exchange for the period of 2022-2023. The findings indicate that disclosing key audit matters can shorten audit report lag; the more key audit matters disclosed, the faster the audit process can be completed. Company size has a negative impact on audit report lag, while profitability does not affect audit report lag. The study highlights that shortening audit report lag is crucial for reducing economic uncertainty. When auditors can complete the audit report earlier, stakeholders can make better decisions based on accurate and up-to-date information, thus reducing economic uncertainty and the information gap between management and other stakeholders.

BOARD CHARACTERISTICS AND AUDIT QUALITY OF LISTED CONSUMER GOODS FIRMS IN NIGERIA

The study investigates the effects of board characteristics on the audit quality of publicly traded listed consumer goods firms in Nigeria from 2013 to 2022. An ex-post facto research approach was used in this study. For data analysis, the panel regression technique was used in the study. The study's findings revealed that board independence and board financial expertise have a positive and significant effect on the audit quality of Nigerian listed consumer goods companies. However, board gender diversity had a negative and insignificant effect on the audit quality of Nigerian-listed consumer goods companies. The study concludes that boards with more independent members who are not influenced by management may improve the audit process efficacy. To improve audit quality, listed consumer goods firms should focus on retaining board independence and guaranteeing the presence of directors with significant financial experience. While the relationship between board gender diversity and audit quality is still uncertain, it is critical to promote diversity and inclusivity on corporate boards in order to build a more robust governance structure. Continuous monitoring and research in this area will contribute to a better understanding of the relationship between gender diversity and audit quality.

Assessing the Integration of ChatGPT in IT Audits that Support Financial Statement Audits

Artificial intelligence (AI) has brought significant changes in many fields, including the audit sector. Generative AI, a type of AI, leverages deep learning models to generate human-like content like images and words. ChatGPT, a type of generative AI, is a language model capable of revolutionizing information technology (IT) audits in support of financial statement (FS) audits. This paper highlights and examines advantages and disadvantages of incorporating ChatGPT into IT audits that support FS audits. ChatGPT offers benefits such as efficiency, precision, and speed, which are vital in the IT audit process. However, it also comes with challenges that need to be addressed. This paper contributes to the growing body of knowledge related to the use of ChatGPT in IT audits that support FS audits. The paper further provides insights into how audit firms can effectively adopt ChatGPT to improve the quality, efficiency, and effectiveness of their IT and FS audits.

Research on Optimization of Internal Audit Process under the Background of Big Data

In the era of big data, it is especially vital to optimize the internal audit process. Traditional methods are increasingly inadequate to handle the burgeoning volume of data and intricate environments. Consequently, leveraging big data technology to enhance audit processes has become essential. The role of internal audit should evolve from mere supervision to a service-oriented function, aiming to bolster governance, uncover issues, and enhance value. Nevertheless, challenges such as inadequate audit independence and feeble rectification mechanisms persist. The integration of big data technology with internal audit practices can markedly elevate the quality and efficiency of audits, and foster innovation in audit methodologies. To optimize the audit process, it is imperative to define clear objectives, propose practical and viable solutions, and further refine the quality and sophistication of audit work through techniques like data preprocessing and analysis.

Interruption reduction during oral medication rounds among nurses in hematology-oncology wards: a best practice implementation project.

The aim of the project was to reduce interruptions during oral medication rounds among nurses working in hematology-oncology wards by improving compliance with best practices by 20%. Medication errors can adversely affect patient safety. Hence, understanding the underlying contributors to medication errors is necessary. Nurses are the ones who administer medications to patients; however, in clinical areas, interruptions are prevalent and could contribute to medication errors. It is therefore recommended that interventions be implemented to minimize interruptions. This project was conducted in two hematology-oncology wards from March 2022 to March 2023. Target participants were nurses who served medications in the morning. The project followed an evidence-based audit and feedback methodology using the seven-phase JBI Evidence Implementation Framework. JBI's Practical Application of Clinical Evidence System (PACES) was used to support the audit and feedback process. An interruption reduction bundle consisting of three best practices was implemented. At baseline, only 24% of medications administered occurred without interruption. One month after implementation, there was a 51% improvement in compliance. Six months after implementation, compliance increased to 58%. Nine months post-implementation, the compliance rate remained at 59%. Absolute interruption counts decreased from 47 (baseline), to 27 (1 month post-implementation), to 24 (6 months post-implementation), to 16 (9 months post-implementation). All types of interruptions decreased when comparing the baseline with the latest post-implementation result. The project used evidence-based interventions in a bundle, effectively reducing interruptions during oral medication rounds, and sustaining positive results. http://links.lww.com/IJEBH/A256.

Promoting sleep and rest in hospitalized children: a best practice implementation project.

The objective of this project was to implement scientific evidence to promote sleep and rest in pediatric patients during hospitalization. Hospitals are not conducive to quality sleep, as external factors such as light, noise, and interruptions from health care staff can disturb patients. Being hospitalized has a detrimental impact on children's sleep because it reduces how much sleep they get and the quality of that sleep. It has been reported that up to 20% to 30% of hospitalized children experience sleep problems. This project was conducted at the Marqués de Valdecilla University Hospital in Cantabria, northern Spain. The project used the JBI Evidence Implementation Framework, which is grounded in an audit, feedback, and re-audit process, together with a structured approach to identifying and managing barriers to change. The study subjects were 100 children aged 2 to 16 years, who were admitted to the hospital's pediatric unit from November to December 2021, and 27 multi-disciplinary health care staff. Implementing the evidence-based strategies improved our care practices, with the follow-up audit results showing a marked improvement in compliance. Thus, training health care staff on pediatric sleep increased from 4% to 80%; using a multi-faceted approach to sleep promotion increased from 21% to 87%; and promoting relaxation techniques to promote sleep increased from 0% to 80%. The project met its objectives. Areas for improving children's sleep and rest during hospitalization were identified. To avoid resistance to change, it was necessary to involve the entire team and maintain training. We recommend follow-up audits once a year, to ensure the sustainability of the project. http://links.lww.com/IJEBH/A252.

Investigating the impact of adopting big data and data analytics on enhancing audit quality

Purpose This study aims to empirically investigate the impact of adopting big data and data analytics (BD&A) on audit quality (AQ). Design/methodology/approach A questionnaire was distributed among audit practitioners working at audit firms in Egypt and 205 responses were collected. Partial least square structural equation modeling (PLS-SEM) was used to analyze and test research hypotheses. Findings The results reveal that BD&A has a direct significant positive effect on the audit process (AP) and auditor competence (AC). However, an insignificant impact of BD&A is found on audit fees (AF). In addition, the results indicate that BD&A has significant positive direct and indirect impacts on AQ. Research limitations/implications The results of this study will benefit several auditing stakeholders, such as audit firms, audit regulators, novice financial auditors and academic scholars. Originality/value This research is one of the earliest to empirically address the role of BD&A in enhancing AQ. It incorporates AP, AC and AF as mediators into a single model to explain the impact of BD&A on AQ. Also, it attempts to provide empirical evidence from a developing country with a less-regulated audit environment.

An efficient protocol for commissioning radiophotoluminescence dosimeters for radiotherapy dosimetry audits

PurposeThe aim of this study was to develop an efficient protocol for the commissioning of 1000 radiophotoluminescence dosimeters (RPLDs) for use in postal dosimetry audits in radiotherapy. This involved the determination of correction factors necessary to reduce measurement uncertainty and ensure accurate dose measurements. MethodsThe commissioning process started with the RPLDs subjected to a series of controlled irradiations to determine their individual nominal response. Experiments were also conducted to assess the influence of irradiation position, reading position, and ambient temperature on the dosimeter readings all which were accounted for calculating individual sensitivity correction factors (SCFs) for each dosimeter. Statistical analysis was performed to evaluate the variability of SCFs depending on normalization group. An additional investigation simulating different dosimetry audit batches was conducted to study the effect of SCF variability on dosimetry audit measurements. ResultsThe adopted commissioning protocol required irradiation position correction factors (0.990–0.996), readout tray position correction factors (0.992–1.01) and room temperature corrections (∼0.4 % per ° C). This enabled the calculation of SCFs for a batch of 1000 RPLDs and the analysis found the majority of SCFs falling within the range of 0.985–1.015. The standard deviations of the SCF distributions were approximately 1% for all normalization groups. It was observed that SCFs normalized to the entire batch of 1000 dosimeters could be effectively used for smaller audit batches, with an additional uncertainty contribution of up to 0.2%. This minimal increase in uncertainty is acceptable within the context of dosimetry audits. ConclusionsThe developed protocol for commissioning RPLDs provides a reliable method for ensuring accurate dose measurements in postal radiotherapy dosimetry audits. The correction factors applied during the commissioning process were thoroughly described to effectively minimize measurement uncertainty. The findings support the use of SCFs normalized to large dosimeter batches for smaller audit groups, thereby streamlining the dosimetry audit process. Future research should focus on the long-term stability of SCFs to further enhance the reliability of RPLD-based dosimetry audits.

The effect of internal audit planning on risk factors: evidence from Yemen’s banks

This study aims to determine the extension of implicating risk factors in strategic planning for internal audit in Yemeni commercial banks, including inherent risk factors and control risks, whether caused by internal or external influences, and focuses on the strategic purpose of internal audit. A questionnaire instrument, specifically designed for this research purposes, was distributed to 58 respondents comprising internal auditors of commercial banks, as well as auditors of the External Control Department of the Central Bank of Yemen. The study determines whether Yemeni commercial banks include internal auditing in their operational structure. It also determines the risks that internal auditors prioritize while developing their internal audit strategies. This study uses Smart PLS methodologies to evaluate the hypotheses through data analysis. The results indicate that internal audit is considered one of the important operational activities in the structure of commercial banks of Yemen, and that the planning process for internal audit largely takes into account the inherent risk factors and control risk factors, whether the audit process is carried out by internal auditors or auditors of Central Bank of Yemen. AcknowledgmentThe authors extend their appreciation to the Deanship of Scientific Research at King Khalid University for funding this work through a large-group Research Project under grant number (RGP.2/131/45)”.

Peranan PT IMC Ship Management Selaku Auditor Internal Terhadap Safety Management System di MV. Dewi Shinta Manggala

Internal audit activities are carried out to meet and implement the Safety Management System (SMS) rules so that safety on board ships is implemented in accordance with the ISM Code. In addition, an internal audit conducted by a shipping company can minimize the findings of an external audit of the Safety Management System (SMS). The purpose of this research is to find out the implementation process, obstacles and solutions for the implementation of MV internal audit. Dewi Shinta Manggala. The method carried out in this study is qualitative descriptive. Data collection was carried out by in-depth interviews, observations, and documentation. The results of the study show that the obstacles faced in the obstacles experienced in the internal audit process are the unsuitable time between the ship's schedule and the auditor resulting in delays, crew ratings that are not optimal in implementing the Safety Management System (SMS), and the crew's understanding of the Safety Management System (SMS) on board the ship which is considered to be still lacking. So that the efforts that must be made, namely the company's internal parties communicate well with each other, the company gives strict sanctions to crews who do not optimally implement SMS, the company requires crews to attend SMS training.

Methodologies and best practices for audit and compliance in governmental financial management

This review paper explores the methodologies and best practices in audit and compliance in governmental financial management. It provides a comprehensive overview of the regulatory framework and standards governing public sector audits, discusses the types of audits commonly conducted, and outlines the typical audit processes. The paper identifies significant challenges faced in governmental auditing, such as limited resources, the complexity of operations, and resistance to change. It highlights the critical role of risk management and technology in addressing these challenges. Furthermore, it emphasizes the importance of ongoing training and capacity building for auditors and compliance officers. The paper concludes by considering emerging trends in the field, such as the integration of artificial intelligence and the emphasis on sustainability. It offers recommendations for further research to enhance the efficacy of governmental audit and compliance practices. Keywords: Governmental Financial Management, Audit Processes, Compliance, Risk Management, Public Sector Accountability.

Constructing risk in trustworthy digital repositories

PurposeThis article investigates the construction of risk within trustworthy digital repository audits. It contends that risk is a social construct, and social factors influence how stakeholders in digital preservation processes comprehend and react to risk.Design/methodology/approachThis research employs a qualitative research design involving in-depth semi-structured interviews with stakeholders in the Trustworthy Digital Repository Audit and Certification (TRAC) process, and document analysis of the TRAC checklist and audit reports. I apply an analytic framework based on the Model for the Social Construction of Risk in Digital Preservation to this data.FindingsThe findings validate the argument that risk in digital preservation is indeed socially constructed and demonstrate that the eight factors in the Model for the Social Construction of Risk in Digital Preservation do indeed influence how stakeholders constructed their understanding of risk. Of the eight factors in the model, communication, expertise, uncertainty and vulnerability were found to be the most influential in the construction of risk during the TRAC audit process. The influence of complexity, organizations political culture, were more limited.Originality/valueThis article brings new insights to digital preservation by demonstrating the importance of understanding risk as a social construct. I argue that risk identification and/or assessment is only the first step in the long-term preservation of digital information and show that perceptions of risk in digital preservation are shaped by social factors by applying theories of social construction and risk perception to an analysis of the TRAC process.

The impact of information technology capability on audit report lag and audit fees: empirical evidence from the COVID-19 pandemic

Purpose This study aims to examine the impact of client information technology (IT) capabilities on audit report lag and audit fees in Jordanian companies listed on the Amman Stock Exchange (ASE) during the COVID-19 pandemic. Design/methodology/approach This study analysed financial and non-financial data from 72 Jordanian public shareholding companies listed on the ASE between 2014 and 2021. Using fixed- and random-effects models, the authors examined the impact of client IT capabilities on audit report lag and audit fees. The authors also examined how the COVID-19 pandemic might affect audit report lag and audit fees. The analysis incorporated various control variables specific to the Jordanian context to ensure accuracy. Findings Empirical evidence indicates that client IT capabilities do not significantly impact audit report lag and audit fees. In contrast, the COVID-19 pandemic has positively impacted audit report lag and audit fees, leading to an increase in audit report lag of 60 to 67 days and an increase in audit fees of approximately 15%. It is worth noting that these effects are more pronounced when influenced by factors including return on assets, company losses and audits conducted by the Big 4 firms. Research limitations/implications The scope of this study, which focuses on Jordanian firms, may limit the generalisability of the findings to other contexts. Reliance on aggregate IT infrastructure and software assets as proxies for IT capabilities might not fully capture their multifaceted nature, overlooking the qualitative aspects crucial for audit outcomes. Furthermore, excluding external factors such as governmental regulations underscores the need for future research to explore the nuanced interplay between IT capabilities, internal control systems and regulatory environments, enriching our understanding of audit practices. Originality/value This study contributes to auditing literature by examining the interplay between IT capabilities and audit processes during the COVID-19 pandemic in Jordan. This study highlights the unexpected finding that IT capabilities have minimal impact on audit report lags and fees, opening new avenues for research on how pandemics and similar crises can reshape auditing practices and influence regulatory policies in an evolving economic environment.

Pengaruh kompetensi dan integritas pada kualitas audit dengan key audit matters sebagai moderasi

This research aims to determine the influence of competency and integrity on audit quality with key audit matters as moderation at public accounting firms in DKI Jakarta that are active and registered with the Financial Services Authority (OJK). This research uses primary data with a survey method, namely distributing questionnaires with sample determination using a random sampling method, which 127 respondents used to spread across several Public Accounting Firms in DKI Jakarta. The data analysis method used in this research is the multiple regression method. This research shows that competence and integrity positively affect audit quality, and related moderating variables show that key audit matters (KAMs) cannot strengthen the relationship between competence and integrity on audit quality. Public interest statements Ensuring auditors' competency and integrity and effectively utilizing key matters (KAM) makes the audit process more transparent. This fosters greater public confidence in audited financial reports and ensures the reliability of company-provided information. Regulating the influence of competence and integrity on audit quality through KAM is expected to enhance transparency in financial information management, allowing for more informed public investment and financial decisions.

The role of auditing culture in sustainable mining practices: A review of Ghana’s mining sector

The study looks at Ghana’s mining industry’s audit culture and green mining practices about their social responsibility to the communities where their mines are located. Results: According to this study, the economic motivations of mines and green mining are inversely related. Even large mining companies incur significant costs associated with their green mining initiatives because they require a different budget each year, which has an impact on their ability to maximize wealth. Conversely, mines with strong green mining initiatives enjoy positive public perception, and vice versa. Ghanaian mines do not have pre- or during-mining strategies; instead, they only have post-social and post-environmental methods. The best method for evaluating mines’ environmental performance in the community in which they operate is, according to this study, social auditing. This is primarily influenced by the mine’s audit culture, but it is also influenced by the auditor’s compliance with audit processes, audit guidelines, and, ultimately, the audit firm’s experience. The analysis confirms that Ghana’s mine environmental performance is appallingly low since local audit firms are not used in favor of foreign auditors who lack experience or empathy for the problems encountered by these mining communities. Last but not least, corporate social responsibility (CSR) is connected to Ghana’s development of green mining, either directly or indirectly. Whether the mine adopts a technocrat, absolutist, or relativist perspective on mining will determine this. The study discovered that, in contrast to the later approach, the first two views generate work in a mechanistic manner with little to no consideration for CSR.