Substantive Testing Research Articles

Optimizing Shopping Experience by Integrating Augmented Reality and Payment Gateway in SME Storefronts

In the rapidly evolving digital era, leveraging advanced technologies to enhance the online shopping experience has become crucial, especially for small and medium-sized enterprises (SMEs) aiming to compete in the global market. This research focuses on optimizing the shopping experience by integrating Augmented Reality (AR) and Payment Gateway technologies into a storefront platform specifically designed for women's clothing SMEs. The study begins with a comprehensive analysis of market trends, customer behavior, and the challenges faced by SMEs in adopting these technologies. A detailed literature review provides the foundation for developing a robust conceptual framework. The prototype development phase involves designing 3D models using CLO | 3D Fashion Design Software, converting these models into AR experiences with Meta Spark Studio, and integrating the Midtrans Payment Gateway using Laravel. The AR feature enables users to virtually try on clothes via Instagram, while the Payment Gateway ensures quick and secure transactions. The final phase involves rigorous functional and substantive testing, focusing on user experience, transaction efficiency, and overall system performance. Results demonstrate that the integrated prototype significantly enhances the shopping experience, providing seamless AR interactions and efficient payment processing. Users reported high satisfaction levels with the system's usability and security. The study concludes that integrating AR and Payment Gateway technologies into SME storefronts can substantially improve their competitiveness in the digital market, offering practical insights and guidelines for future implementations in the e-commerce sector.

Critical Technologies of Audit Services

Introduction. In the context of the need to improve the quality of audit services and ensure confidence in their results on the part of interested users of reporting, it is necessary to search for “points of growth” through the development of audit tools that are not inferior in technology to modern accounting and analytics. Purpose of the study is to identify key audit tools relevant for audit assignments and expert consulting activities of auditors, and to determine the possibilities of implementing modern analytical tools to improve the efficiency, effectiveness and quality of audit services. Methods. The study used methods of critical analysis of applicable standards and best auditing practices, audit procedures for assessing the effectiveness of controls and substantive testing, risk mapping, and the abstract-logical method. Results. Key audit tools were identified and classified depending on the stage of the audit, the goal setting of the procedure (compliance or efficiency), and the qualitative characteristics of the audit assignment (customer satisfaction or rationality); General directions and differences in the development trends of audit tools and other types of auditors’ activities have been identified. Conclusion. The identified critical technologies are aimed at maximizing the efficiency of audit activities through risk-based planning, reducing the possibility of manipulating the results of procedures by means of objectification, predicting significant distortions, parameterizing risks and assessing the results of procedures, regulating the qualitative characteristics of the methods used at the levels of the audit organization and the professional association of auditors.

Artificial intelligence application in auditing

Artificial intelligence (AI) is a rapidly evolving technology that has gained prominence in various industries, including auditing. AI enhances the effectiveness of auditors by automating routine tasks and improving data analysis. Major audit companies, such as EY and PwC, have integrated AI into their practices to save time, increase accuracy, and provide better services to clients. AI applications in auditing include anomaly detection, fraud prevention, revenue analysis, risk assessment, and financial data analysis. Machine learning algorithms, a subset of AI, play a crucial role in analyzing large volumes of financial data, identifying patterns, and making predictions.AI implementation in auditing involves different stages, including pre-planning, planning, contracting, control risk assessment, and substantive tests. The benefits of AI for auditors and clients include improved data analysis, reduced human error, increased efficiency, and enhanced audit quality. However, the successful implementation of AI in auditing requires a clear understanding of its strengths, limitations, and challenges, as well as interdisciplinary collaboration and the development of specialized frameworks.AI has the potential to transform audit procedures, but human expertise and understanding are still essential for its proper use. It is important to recognize that while AI can automate certain tasks, it cannot replace auditors’ judgment and critical thinking skills.There are also challenges associated with AI implementation in auditing. These include the need for extensive data preparation, ensuring data quality and integrity, managing complex algorithms, and addressing regulatory and compliance issues. Furthermore, auditors must stay updated with the latest advancements in AI and continuously adapt their skills to leverage the technology effectively.
 JEL classification: M420

Does external auditor coordination influence internal auditor effort?

The purpose of this study is to investigate how the level of controls testing coordination with the external auditor affects internal auditors' effort. The internal auditor's planned substantive testing audit hours are the measure of effort in this study. Regulators and stakeholder organizations have encouraged more collaboration between external and internal auditors to improve audit efficiency. The effect of external auditor coordination on internal auditors' planned audit hours has important implications for audit efficiency and effectiveness. An experiment is conducted with 112 internal auditors to examine the hypothesized effect. The study uses a 2 × 2 between-subjects design and manipulates fraud risk and external auditor coordination. Consistent with my prediction, I find that coordination moderates the relationship between fraud risk and planned audit hours. The results illustrate that although high external auditor controls testing coordination decreases internal auditors' planned substantive testing audit hours, internal auditors are more sensitive to responding to fraud risk when external auditor controls testing coordination is high.

Benchmarking Neural Capacity Estimation: Viability and Reliability

Recently, several methods have been proposed for estimating the mutual information from sample data using deep neural networks. This approach is referred to as neural mutual information estimation (NMIE). NMIEs differ from other approaches in the literature as they are data-driven estimators. As such, they have the potential to perform well on a large class of capacity problems. To test the performance across various NMIEs, it is desirable to establish a benchmark encompassing the different challenges of capacity estimation. This is the objective of this paper. We consider three scenarios for benchmarking: (i) the classic AWGN channel, (ii) channels continuous inputs – the optical intensity and peak-power constrained AWGN channel (iii) channels with a discrete output – i.e., the Poisson channel. We also consider the extension to the multi-terminal case with (iv) the AWGN and optical MAC models. We argue that benchmarking a certain NMIE across these four scenarios provides a substantive test of performance. We study the performance of <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">mutual information neural estimator</i> (MINE), <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">smoothed mutual information lower-bound estimator</i> (SMILE), and <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">directed information neural estimator</i> (DINE) and provide insights into the performance of other methods as well. To summarize our benchmarking results, MINE provides the most reliable performance.

Big tech’s acquisition challenge to EU merger control

ABSTRACT In recent years, there has been a tidal wave of merger filings involving large digital firms acquiring low turnover but high value start-ups. The vast majority of those transactions have flown under the radar of EU and National Competition Authorities and, among the few which have been reviewed, none has been blocked. Competition scholars wonder whether there has been a systematic bias towards under-enforcement against acquisitions of start-ups by already dominant tech firms. Some Member States are calling for a reform of the EU merger control’s notification system and an adaptation of the substantive test to effectively address cases of potentially predatory acquisitions.

Initial Implementation of Data Analytics and Audit Process Management

To answer the call for more evidence on the adoption and effectiveness of Big Data Analytics in auditing, this study investigates auditors’ use of data analytic tools in audit-process management, including audit planning, testing, and conclusions. The analysis, which is performed as a qualitative study, is based on twenty-eight semi-structured interviews with Big 4 and non-Big 4 audit professionals in Thailand to gain insights into their experience implementing audit data analytic tools in the initial stage. Findings suggest that auditors primarily use data analytic tools in audit planning and substantive testing. Nevertheless, auditors do not perceive a need to use these tools to test internal controls and conclude audit opinions. In addition, we find that auditors tend to apply audit data analytic tools for anomaly detection and testing management assertions. Overall, auditors perceive the benefits of audit data analytic tools in improving their audit process management. Findings present practical implications for audit firms and audit professionals, including how to initially implement data analytic tools effectively in auditing and as guidelines for regulators on how to develop auditing standards that govern the use of Big Data and data analytic tools. We note some limitations in this study, such as the generalizability of the results, auditors’ personal biases, and the different tools and techniques used by each audit firm.

Pengaruh Keanggotaan Komite Audit Dan Keahlian Keuangan Komite Audit Terhadap Pengungkapan Kelemahan Pengendalian Internal Dan Implikasinya Terhadap Efektivitas Test Substantif Transaksi

This study aims to determine the influence of the audit committee membership and the audit committee's financial expertise on the disclosure of internal control weaknesses and their implications for the effectiveness of the substantive test transactions at PT Dirgantara Indonesia (Persero). The method used was a survey, descriptive and verification approaches and primary data. Based on the research results, it is known that the audit committee membership has an effect of 21.1% and the financial expertise of the audit committee is 22.8% on the disclosure of control weaknesses. Simultaneously it gives an effect of 43.8%. Disclosure of internal control weaknesses has an effect of 20.6% and the effect of audit committee membership on the effectiveness of the substantive testtransactions of 11.2%. The audit committee's financial expertise exerted 14.6% effect on the effectiveness of the substantive test of the transaction. Audit committee membership and audit committee financial expertise simultaneously affect the effectiveness of the substantive test transactions by 25.8%.

Early Warnings of SOX 404 Material Weaknesses in Internal Control

SUMMARYSOX Section 404(b) continues to be of interest to legislators and regulators. Prior studies show that in the initial implementation years of SOX 404, the majority of material weakness (MW) disclosures were “surprise” MWs—i.e., disclosed at year-end, but not in prior quarterly filings (Hermanson and Ye 2009; Munsif, Raghunandan, and Rama 2013). We show that during the years 2010–2019, 74 (72) percent of MW disclosures by accelerated (non-accelerated) filers were surprise disclosures. Additionally, surprise MWs are more likely to be associated with internal control issues that involve year-end adjustments and/or documentation, procedure, or policy issues. “Early-warning” MWs are more likely due to systemic internal control problems, like segregation of duties. Our findings suggest a role for auditors and substantive audit tests in the disclosure of certain types of MWs. Increased auditor emphasis on interim substantive tests may reduce the likelihood of surprise MWs.

The tolerance of the despised: Atheists, the non-religious, and the value of pluralism

Central to the debate of what constitutes tolerance has been what is tolerable—and who is tolerant. While the existing literature has engaged with the role of religion in tolerance, there is almost no empirical work on individuals without religion. Not surprisingly, theory relevant to this question is largely absent in the current literature. Therefore, using extensive work in political theory, we derive the notion that the non-religious and atheists will show greater tolerance given a stronger adherence to the value of pluralism. We merge this theory with the modern empirical literature and use four waves of the World Values Survey (waves 3, 4, 5, and 6) to provide a substantive test using a novel measure of tolerance as a crucial individual value. We find that the value of pluralism does distinguish tolerance levels among the self-identified non-religious, although less so for atheists.

EU Merger Control Between Law and Discretion: When Is an Impediment to Effective Competition Significant?

This paper considers the interpretation of the substantive test laid down in Article 2 of Regulation 139/2004. It focuses on horizontal mergers in the so-called ‘gap’ cases, which would not result in the creation or the strengthening of a (single or collective) dominant position. In its practice and soft law instruments, the Commission has construed Article 2 in such a way that virtually any transaction involving actual or potential competitors could lead to a finding of a significant impediment to effective competition. Under this approach, the substantive test would be fulfilled, in principle, in every horizontal merger. In CK Telecoms, the General Court crafted an alternative framework that is capable of meaningfully constraining administrative action and ensures that judicial review in EU merger control remains effective. EU merger control, horizontal mergers, judicial review, issues of law, discretion, separation of powers, CK Telecoms, SIEC test, telecommunications, Airtours

Application of Information Digitalization Technology in Audit Process Through Intelligent Process Automation (IPA) Approach

Intelligent Process Automation (IPA) is a technology capable of organizing automation processes for structured, semi-structured, and unstructured data. In audit assignments, there are three types of assignments, namely structured, semi-structured and unstructured assignments. This study aims to identify the possibility of applying IPA (Intelligent Process Automation) in audit assignments. By using IPA technology, it is expected to be able to create efficiency and effectiveness in the audit process. As we know that audit assignments require time and high costs, so IPA technology is expected to be able to shorten audit time and costs without reducing the quality of services provided by auditors. This research is qualitative research using primary data. The respondents in this study are public accountants who work in the Public Accounting Firm (KAP). The research instrument consists of mapping structured, semi-structured, unstructured audit assignments; then identified each with the possibility of applying IPA (Intelligent Process Automation) in each audit process. Respondents in this study were forty-one. The results of the analysis using descriptive analysis and frequency analysis, and it was found that the use of automation of audit procedures at the audit planning stage was still rarely used. With the following details (1) structured assignment, still rarely used; (2) semi-structured assignment, still rarely used; (3) unstructured assignments, sometimes used. Meanwhile, the use of automation of audit procedures at the control and substantive testing stage as well as the overall conclusion (audit completion) stage is sometimes used, both structured, semi-structured, and unstructured assignments.

Determinants of adoption of computer‐assisted audit tools and techniques among internal audit units in Ghana

AbstractThis study investigates the determinants of adoption of computer‐assisted audit tools and techniques (CAATTs) among internal audit units in Ghana. Data for the study was drawn from a sample of 75 private and state‐owned enterprises through questionnaires while the partial least squares structural equation modeling was employed to analyze and test the hypotheses. The findings indicate that albeit CAATT adoption within internal audit units is fairly high, the actual usage in the areas of risk assessment, fraud detection, substantive testing, and analytical procedures are still low. Using the extended technology‐organization‐environment (TOE) framework, results show that CAATT behavioral intention is driven by technological readiness, organizational readiness, and environmental readiness but not personal innovativeness. In addition, CAATT behavioral intention influences CAATT adoption among the internal audit units. The findings provide valuable insights to management, heads of audit units, policymakers, and regulators on ways to improve the adoption and use of CAATT. Firms should invest more in training workshops on big data analytics, hiring more data scientists or data engineers, and equipping internal audit units with the information technology infrastructure. The paper complements prior research by applying a hierarchical component modeling technique to the extended TOE framework to investigate CAATT adoption in internal audits.

Wealthy Watches Inc.: The Substantive Testing of Accounts Receivable in the Evolving Audit Environment

ABSTRACTSubstantive testing of accounts receivable through confirmations is an established and required audit procedure. However, the technology used to perform portions of this work is evolving. This case exposes students to the testing of accounts receivable while introducing them to audit-related technologies (such as Interactive Data Extraction and Analysis [IDEA] software and robotic process automation [RPA]) used in practice. In this case, students (1) evaluate a client-provided data file, (2) select a sample of customer invoices using IDEA, (3) obtain audit evidence from their firm's RPA software and evaluate the evidence for the identification of exceptions, (4) project any misstatements from the sample to the population, and (5) document their conclusions. This case helps students develop a greater awareness of technologies used in audit practice. The case also allows students to practice skepticism, apply professional judgment, and hone their business writing skills by documenting their results in a professional memo.

Computer Assistant Substantive Test Model In Audit Of Government Institution Financial Statements

This study aims to determine how big of a substantive test role in improving the quality of audit financial report of government agency (state university). Substantive testing can improve the perceived quality of the audit. The research method used in the preparation of this thesis is applied research. The type of research is R&D/Research and Development. This study uses secondary data that has research data sources from financial databases at State University which contains activity expenditure components. The data collection method used in this study is the documentation method. Results of this study indicate that substantive testing can improve the quality of audit based on procedures that have been done in the field from processing the SAS and BMN databases then run through the ACL application.

Priors in a Bayesian audit: How integration of existing information into the prior distribution can improve audit transparency and efficiency

Auditors often have prior information about the auditee before starting the substantive testing phase. We show that applying Bayesian statistics in substantive testing allows for integration of this information into the statistical analysis through the prior distribution. For example, an auditor might have performed an audit last year, they might have information on certain controls in place, or they might have performed analytical procedures in an earlier stage of the audit. Incorporating this information directly in the statistical procedure enables auditors to tailor their sampling plan to the auditee, thereby increasing audit transparency and efficiency. However, defining a suitable prior distribution can be difficult because what constitutes a suitable prior depends on the specifics of the audit and the auditee. To help the auditor in constructing a prior distribution we introduce five methodologies, consider their pros and cons, and give examples of how to apply them in practice.

A feminist rewriting of Air India v Nergesh Meerza AIR 1981 SC 1829: proposal for a test of discrimination under Article 15(1)

ABSTRACT Nergesh Meerza is one of the earliest and most grave failures of the Supreme Court of India in the field of discrimination law. In a single stroke, not only did the Court drive a wedge between sex and gender to protect only the former from discrimination, it also debarred indirect and intersectional discrimination from the purview of the Constitution. This article presents a feminist judgment in this case which dissents from the original decision of the Court. It develops a version of constitutional protection from sex discrimination which embodies gender, indirect and intersectional discrimination. Importantly, it ventures into the hitherto neglected field of non-discrimination under Articles 15(1) and 16(2), and develops a substantive test for violations. Nergesh Meerza makes clear that without such a test, judges inevitably fail to give any meaning to the non-discrimination guarantees as part of the equality code of the Constitution.

The Invisible Fraud: The Impact of Inattentional Blindness on Auditor Fraud Detection

ABSTRACT Evidence from major fraud investigations has revealed that auditors often fail to attend to visual fraud cues (i.e., red flags) within substantive testing evidence. Research in psychology on inattentional blindness (IB) provides a theoretical framework to explain why this occurs. Although most forensic research has focused on audit planning, we focus on the detection of visual fraud cues embedded in substantive testing evidence. We examine the impact of two interventions, priming and strategic reasoning, on senior audit associates to determine the extent to which these interventions mitigate IB effects. The results indicate that IB effects hinder auditor visual fraud cue detection during the performance of substantive testing procedures and that priming significantly reduced IB effects. The findings provide important implications for practice by drawing the auditor's attention to these effects and by suggesting priming as an efficient and cost-effective intervention to assist in mitigating IB effects in the auditing environment. Data Availability: Please contact the authors.

Proportionality and procedure of monetary policy-making

Abstract In a highly controversial decision, the German Federal Constitutional Court (FCC) decided that the Public Sector Purchase Program (PSPP) of the European Central Bank (ECB) was ultra vires because it violated the principle of proportionality. The FCC took a procedural approach to proportionality, finding that the ECB had failed to substantiate its balancing assessment. Therefore, the Court considered itself unable to review whether PSPP was substantively proportionate, but announced that it might do so in a future case. The judgment raises the fundamental question of how courts should review monetary policy. The article begins by exploring the role of central banks between independence and accountability. Then, it analyzes, in three steps, what role the principle of proportionality should play in the realm of monetary policy. First, I argue that a traditional substantive balancing test as part of proportionality review is not applicable to monetary policy decisions and highlight the pitfalls of the FCC’s approach. Second, I claim that the imposed procedural “duty to substantiate” is not suitable to promote the democratic accountability of the ECB. Third, I contend that, therefore, the PSPP ruling creates an impetus for strengthening the ECB’s supranational accountability. I suggest that improving the monetary dialogue with the EU Parliament and establishing a comprehensive transparency regime for the ECB could further this goal. Ultimately, I propose that a narrow reading of the PSPP ruling could reconcile the current conflict between the FCC and the ECB and still provide a sufficient level of judicial accountability for the ECB’s monetary policy-making.

Investment Screening in the Netherlands

Despite imperfections, the Dutch framework for investment screening could function as a model for more proportionate and clearer investment screening rules. From a procedural perspective, the Dutch framework illustrates that it is possible to establish objective thresholds in order to more specifically target certain companies or categories of companies. Substantively, the Dutch framework shows that the general test of ‘security’ can be narrowed down to more specific substantive criteria. Providing clearer procedural thresholds and substantive tests under investment screening regulations, both in the Netherlands and elsewhere, will help ensure that investments are only restricted or prohibited where genuinely necessary and proportionate in order to safeguard national security interests. The Commission and national authorities throughout the Union should therefore endeavour to establish clearer procedural thresholds and frameworks of assessment to ensure that only transactions that can reasonably pose a threat to security or public order are made subject to filing obligations and are assessed on the basis of more clearly defined substantive criteria. investment screening, FDI screening, security screening, investment law, national security, proportionality, Chinese investments, Regulation 2019/452, investeringstoets, veiligheidstoets, ongewenste zeggenschap