Audit Tasks Research Articles

Impact of remote audit on audit quality, audit efficiency, and auditors' job satisfaction

The audit profession has experienced a digital transformation over the last decade with a rapid shift towards remote auditing forced by the recent COVID pandemic. This shift has led to changes related to the way auditors work and perceive. Through a survey of external auditors, this study addresses how the changes from on‐site audits to remote audits affect audit success (i.e., audit quality, audit efficiency, and auditors' job satisfaction); we also explore dispositional and situational factors that contribute to remote audit success. Our results show that working remotely leads to high audit efficiency. Auditors' flexibility management competency leads to high remote audit quality and efficiency; and a physical working environment conducive for concentrating on audit tasks is positively associated with audit efficiency and auditors' job satisfaction for remote audits. We also found that working remotely could enhance audit quality and efficiency when the audit firm provides sufficient support to auditors. Our study provides insights for audit firms, regulators, and other stakeholders as they evaluate the many challenges the audit profession faces in achieving remote audit success.

Employing string similarity metrics of partners to estimate audit team continuity: determinant and its effects on audit outcomes and pricing

PurposePartners are responsible for allocating audit tasks and facilitating knowledge sharing among team members. This study considers changes in the composition of partners to proxy for the continuity of the audit team. This study examines the effect of audit team continuity on audit outcomes (audit quality and report lags), pricing and its determinant (lead partner experience), which have not been thoroughly examined in previous studies.Design/methodology/approachThis study employs string similarity metrics to measure audit team continuity. The study employs multivariate panel data regression empirical models to estimate a sample of 26,007 firm-years of listed Japanese companies from 2008 to 2019.FindingsThe study reveals that audit team continuity is negatively associated with audit fees, regardless of the auditor’s size. This finding contributes to the existing literature by showing that audit team continuity represents one of the determinant factors of audit fee. For clients of large audit firms, companies with higher (lower) audit team continuity issue audit reports in less (more) time. The experience of lead partners is a strong predictor of audit team continuity, irrespective of audit firm size. Audit quality is not associated with audit team continuity for either large or small audit firms.Originality/valueThis study proposes and examines audit team continuity measures that employ string similarity metrics to quantify changes in the composition of partners in consecutive audit engagements. Audit team continuity expands upon the tenure of individual audit partners, which is commonly used in prior literature as a measure of client–partner relationships.

ЗАВДАННЯ АУДИТУ ІНВЕСТИЦІЙНОЇ ДІЯЛЬНОСТІ ПІДПРИЄМСТВ

The main aspects of the tasks of investment activities of enterprises audit formalization have been studied in the article. According to the results of the research, meaningful characteristics of business operations related to investment activities and their accounting interpretation were identified. It was established that financial reporting indicators characterize investment activity through the disclosure of information about financial results of the execution of business operations, related cash flows, as well as characteristics of capital and financial investment objects. It is proposed to determine the tasks of the audit of investment activities according to the application of set of the management staff statements regarding the financial reporting indicators. The list of tasks, the solution of which will contribute to the auditor's provision of information users with confidence in the adequacy of disclosure of its characteristics, is formalized. The results of the research made it possible to formalize the list of tasks, the solution of which will contribute to the auditor's provision of information users with confidence in the adequacy of disclosure of its characteristics. The specified tasks, among other things, involve the assessment by the auditor the number of aspects of the investment activities of enterprises reflection in financial statements. These aspects include the characteristics of recognizing investment objects as enterprise assets, establishing the fact of carrying out economic transactions with them, the legitimacy of the investment projects implementation, their measurement and accuracy of display, classification and presentation of information to users. At the same time, among the tasks of the investment activities audit, aspects that depend on the investment goal, the method of investment projects evaluating, the formation of financial results from their implementation, and the corresponding cash flows should be taken into account. Among the tasks of further research on the topic of scientific publication, among other things, may be the selection and application of audit procedures that can be used to obtain audit evidence regarding the assertions of management personnel identified during scientific research.

CONSEPTUAL ISSUES OF INTERNAL AUDIT

The characterization of internal audit and the scope of organizational functions are perceived differently by stakeholders. Formed much later than external auditing, internal auditing developed relatively quickly, and that too in several directions. Currently, the most common types of internal audit are operational audit, management audit and performance audit. Studies show that in practice, the listed types of internal audit overlap in their functions, which not only causes confusion among audit beneficiaries, but also takes additional resources from the organization. The article clarifies the functions of operational, management and performance audit from the point of view of the beneficiaries. Operational audit pursues the identification of efficiency reserves in the implementation of various entrepreneurial functions, which are related to production, service provision. The task of management audit is to promote the functioning of the effective management system used in the organization. And the performance audit is mainly related to the public sector organizations and aims not only to find out the reliability of the budgets of state finances, but also their effectiveness in terms of the expectations of the beneficiaries. Therefore, the areas of operational, management, and performance auditing may intersect somewhere in organizations. And the smaller the scope of managerial, operational and performance audit functions, the more effective the organization of internal audit in organizations.

A Framework for the structured Implementation of Process Mining for Audit Tasks

A Framework for the structured Implementation of Process Mining for Audit Tasks

Аудиторська перевірка існування туристичної ренти

The article describes the methodological aspects of the audit of tourist rent, which is one of the sources of income for tourist enterprises. The article aims to develop a method of identifying tourist rent by the subject of financial and economic activity auditing. In order to achieve it, regulatory documents, acts of professional regulation of auditors' activities, and information on the performance of tasks to provide confidence to users of financial statements by independent specialists were used. The specified information was processed by applying such research methods as bibliographic analysis, regulatory analysis, observation, and data systematization. It was found that the emergence and existence of tourist rent are determined by the presence of a tangible or intangible asset used by a tourism industry enterprise. Taking this into account, the audit of the existence of tourist rent involves audit evidence obtaining both the existence of actual rent cash flows and the presence of related assets. The main parameters for which evidence should be obtained are characteristics that allow identification of the asset itself, cash flows that have signs of tourist rent, as well as their mutual identification. For this purpose, taking into account the recommendations of the International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements, the audit procedures that can be applied are defined, and their direction is specified in the context of performing the audit tasks of the availability of tourist rent. The need to physically inspect assets, document and record inspection, external confirmation, inquiry, and analytical procedures was substantiated. The study results allow for optimization of the auditor's work based on the ratio of the costs of resources required to perform the procedures and ensuring the necessary level of trust in the audit results on the part of information users.

Концептуальні засади кадрового забезпечення підрозділів внутрішнього аудиту в центральних органах виконавчої влади

The hostilities and martial law in Ukraine significantly affected the activities of the internal audit units of the central executive authorities. The remote work of the employees of the division and the impossibility of direct interaction with the objects of audits limits the functions of internal audit, but at the same time, its importance in the management of public finances is not lost. New challenges require internal auditors to improve the quality of audits, which directly depends on the quantitative and qualitative composition of internal audit units. The purpose of the article is to develop the conceptual basis for improving the quality of staffing of internal audit units in state authorities. The analysis of staffing and organization of internal audit activities in the main managers of budget funds and their subordinate institutions for 2017-2021 indicates a constant decrease in the number of employees and an increase in the percentage of vacant positions of internal auditors. Such a situation is the result of a number of factors, but the most important of them is the lack of highly qualified, motivated personnel who possess professional competence based on relevant education and practical experience for the proper performance of audit tasks. The article proposes a four-level model of training specialists in the “state internal auditor” profession, which ensures the gradual formation of professional competencies and practical experience, starting from the assimilation of basic theoretical knowledge in higher educational institutions to mandatory certification at the workplace. In order to implement the given proposals, it is important to establish at the legislative level requirements for the educational and professional level of applicants for the position of internal auditor, as well as mandatory requirements for improving their qualifications after enrollment in this position. A study of the currently existing legislative and normative documents on the organization of the activities of the internal audit units of the central authorities shows the absence of any norms that would clearly regulate these issues.

Computer technologies in audit analytical procedures

Introduction. The impact of modern computer technologies on the field of auditing leads to the development and transformation of methods of auditing procedures. In connection with the growing complexity of business operations and the large volume of financial information, the introduction of computer technologies into analytical audit procedures becomes critical to ensure the efficiency, accuracy and reliability of audit operations. After all, when using digital technologies, analytical procedures, which are an important component of auditing, are significantly accelerated, automated and improved. The use of computer technologies in the process of analytical audit procedures allows to significantly increase the efficiency and accuracy of audit operations, accelerating the processing of large volumes of data, conducting analysis and identifying potential deviations or deficiencies in financial reporting. Through the use of specialized audit programs and the integration of artificial intelligence and machine learning, these technologies become a necessary component for the successful performance of modern audit tasks. Purpose. It consists in researching the methodological foundations of analytical procedures in auditing and their practical use in the conditions of digital technologies and the effects of martial law in the country. Method (methodology). To achieve the goal, general scientific, economic and mathematical methods and approaches were used, in particular the method of least squares, analytical procedures and tools: horizontal and vertical analysis, financial ratios, formalization and generalization. The results. The need to unify (typify) analytical indicators, to bring them to a single standard, to uniformity of calculation and terminology, and their recommended values in the conditions of using digital technologies in audit, is argued.

The Advantage of Adopting Risk-Based Internal Auditing in Manufacturing Company

The activities of a company will continue to change following the changes that occur in the internal environment and the community environment. It will pose a risk and can even be an opportunity for the company to increase its profitability. So from that, all companies including manufacturing companies implement Risk Based Audit (RBA). The purpose of this study is the author will describe what are the advantages of a manufacturing company implementing a risk-based internal audit. The research method used in this study is a qualitative method and secondary data. Risk-based audit is a way or method used in carrying out audit tasks by internal auditors to ensure that existing risks are properly and effectively controlled and managed by company management. In the results of this study, the authors will explain risk-based internal audit in general and the advantages of applying a risk-based audit approach to manufacturing companies.

The Role of Internal Audit Computerization in Supporting the Task of External Auditing in Jordanian Insurance Companies

The study aimed to examine the role of the computerization of internal audits in Jordanian insurance companies in supporting the tasks of the external auditor. The study population consisted of managers and heads of internal audit departments, a number which is estimated at 112 in Jordanian insurance companies, of which there were 25 in the year 2021. Using a questionnaire as a primary source for the study data and relevant statistical methods to analyze the respondents’ answers, it is concluded that there is a significant impact for the computerization of internal auditing processes in supporting the tasks of external auditing, and that the computerization of internal auditing processes has a statistical impact on supporting risk assessment, internal control assessment, and the evaluation of audit evidence by the external auditor. The study recommended giving more attention to qualifying both external and internal auditors to work considering the widespread computerized environment, as well as conducting similar studies in different sectors to compare the results from other sectors with those from the Jordanian insurance companies’ sector in this study.

A Review and Evolution of Digital Audit on Auditor Performance

Purpose: The study aims to understand the role of the external auditor in the adoption of digital audit in Malaysia. Design/Methodology/Approach: A literature review was conducted to provide comprehensive knowledge to determine the factors impacting the effectiveness of digital audit. The Technology to Performance Chain (TPC) model outlines how technical developments affect individual performance levels in the implementation of digital audit. Adopting technological tools for digital audit could enhance the efficiency and effectiveness of an auditor’s job performance in auditing. Findings: A conceptual framework comprising factors impacting the adoption of digital audit effectiveness in Malaysia was proposed based on previous studies and the transition from manual to automated audit tasks in digital audit. Practical Implications: Regulators need to provide a detailed framework for auditors on the importance of adopting digital audit during audit tasks. Secondly, the regulators need to emphasise the requirement of audit standards to achieve the objectives. Finally, the lack of empirical research on the role and effectiveness of digital audit highlights the need to develop an appropriate methodology to enhance the adoption of digital audit. Originality/Value: The regulators ensure compliance with audit standards on the adoption of digital audit to enhance auditors’ performance. The issues that require further investigation were identified to determine the factors that affect digital audit practices. The study also examined the elements influencing the effectiveness of digital audit presented in one framework. Keywords: Auditor, digital audit, technology performance chain model, audit tasks

Conducting a strategic audit during the development and approval of state strategic planning documentsy

The current realities of the work of federal executive and legislative authorities force the professional community to develop approaches to auditing and monitoring the processes of adoption, approval and execution of strategic planning documents of the Russian Federation. The study substantiates the need for a strategic audit during the development and approval of strategic planning documents. The paper presents the main comments of the Accounts Chamber of the Russian Federation on the current strategic planning system, and also describes the system-wide problems of developing strategic planning documents. The authors have developed possible directions of strategic audit in the development of strategic planning documents, as well as methodological principles that can be guided for the effective implementation of strategic audit in the development of strategic planning documents. In conclusion, the authors present the primary tasks of strategic audit in the development and approval of strategic planning documents.

Internal audit in a credit institution as a tool for improving the economic security of an economic entity

When writing this scientific article, the author considered the role of internal audit in the economic security of credit institutions. The formed conditions of instability of the economic system and negative external impact, manifested in sanctions pressure, mediate the need to increase the effectiveness of internal audit in credit institutions in order to increase the economic security of an economic entity. The author considers the definition of internal audit in accordance with the legislation of the Russian Federation, identifies the tasks of internal audit, as well as the prerequisites for the formation of an internal audit service in an organization, and the main functions of internal audit. Internal audit is an independent and objective activity of providing guarantees and consulting, which improves the activities of the organization and increases its value. The differences between internal audit and other forms of control are highlighted. It is important to note that internal audit occupies one of the most important roles in the structure of the organization and is in constant interaction with the system of economic security of the organization. Internal audit is considered the foundation of the organization and is considered as a key element for the application of the accounting system. Effective internal audit planning allows audit activities to be one of the aspects that protects the organization and increases economic security. Moreover, effective internal audit planning and prioritization of the units to be audited are important both from the point of view of the effective use of internal auditors and from the point of view of the effective use of economic resources. Thus, the tasks assigned to the study can be considered completed. The problems of the research topic were fully developed, a block of relevant information was presented and analyzed for each of the tasks, and appropriate conclusions were drawn.

Blockchain-Based Secure Deduplication and Shared Auditing in Decentralized Storage

Data deduplication and public auditing are significant for providing secure and efficient network storage services. However, the existing data deduplication schemes supporting auditing not only cannot effectively alleviate the threats of the single point of failure and duplicate-faking attack, but also have to bear the massive waste of computation and storage resources caused by metadata redundancy and repetitive audit tasks. In this article, we propose a blockchain-based secure deduplication and shared auditing scheme in decentralized storage. Specifically, our scheme utilizes a novel deduplication protocol based on the double-server storage model to achieve efficient space-saving while protecting data users from losing data under a single point of failure and duplicate-faking attack. Besides, it sharply reduces the computation and storage costs of metadata by introducing a lightweight authenticator generation algorithm and update protocol. On this basis, our scheme further adopts a blockchain-based two-way shared auditing mechanism to achieve decentralized public auditing without the third-party auditor, in which the audit authenticators and results of outsourced data are shared among its users to avoid repetitive audit tasks. Security and performance analysis indicates the practicability of our scheme.

Algoriths and Procedures for Investment Audit Using a Risk-Based Approach

The research discusses the features of the investment audit at various stages of implementing investment projects. The subject of the study is a methodological approach to its implementation. The goal is to reveal the content of the investment audit method. The work used general scientific principles and research methods: systematization, induction and deduction, comparison, comparison, synthesis, analysis of statistical data. The problems of creating methodology and techniques are relevant for both internal and external audit of investments. The result of the study was the definition of factors influencing management decisions in investment; audit tasks and regulatory regulations for each stage of the investment project; methods used for investment audit and internal control. Also, in the work’s course, the authors developed algorithms, methods and principles for checking assumptions (as components of the investment audit methodology). Also, the authors presented recommendations on implementing an audit by the stages of the investment process. They gave classifiers of procedures, investment risks and assumptions that have been checking during the audit, and reflected their relationship with information sources. The results of the study can be used by internal and external auditors of investment projects, credit and financial institutions, business entities.

The Effect of Audit Partner Diversity on Audit Quality: Evidence from China

This study examines the effects of audit partner diversity on audit quality. Using a sample of Chinese listed companies from 2004–2018, we find that audit quality is positively associated with audit partner diversity in educational background, gender, and generational cohort. These findings suggest that diverse partner teams outperform homogenous teams and support the information perspective that audit partner diversity produces different viewpoints and perspectives, thus reducing judgement bias and leading to higher audit quality. Furthermore, we find that client information asymmetry, auditor task motivation, and task ability play a moderating role in reinforcing the positive effects of audit partner diversity on audit quality. Our findings have practical implications for audit firm personnel dispatching and team formation, and heighten the need to integrate team dynamics in the audit quality framework.

Certificateless public auditing scheme with designated verifier and privacy-preserving property in cloud storage

In recent years, cloud storage has become an attractive service for data owners to store their personal data. Since they lose physical control of their data, it is necessary to regularly audit its integrity. The public auditing technique is very popular because it is suitable to outsource the auditing task to any third-party auditor, who has professional knowledge on auditing. However in many practical scenarios, the data owner may expect some designated verifier (instead of any) to audit its data. Thus, the public auditing scheme with designated verifier was proposed. In order to further reduce the cost of managing certificates, and to avoid the dependence on public key infrastructure , identity-based auditing scheme with designated verifier was recently proposed. Nevertheless, the proposed identity-based auditing scheme still suffers from the key escrow attack the risk of privacy leakage . In this paper, for the first time, we propose a certificateless public auditing protocol with designated verifier privacy-preserving property. More concretely, it can not only protect the privacy of the stored data against the designated verifier, but also resolve key escrow problem existed in identity-based technique. Its security is based on the Computational Diffie–Hellman and Weil Diffie–Hellman assumptions. Finally, the performance analysis experimental results of the proposed protocol show that our auditing scheme is efficient feasible to applications in real life.

The effects of competency, situational support and information search to auditors' performance

The competency of an auditor is important when comes to conducting audit tasks particularly one who has extensive knowledge, specific skills and techniques. This study aims to identify the key factors affecting the auditors’ performance. Through the lens of the Behavioral Decision Theory (BDT) framework, this study examines the direct effects of audit competency, situational support and information search factors in enhancing auditors’ performance. A survey was conducted on audit firms of varying sizes in Malaysia. The data were collected and were analyzed using Structural Equation Modelling-Partial Least Square (SEM-PLS) statistical tools. Based on evidence from external auditors, the results indicate that audit competency, situational supports and information search are important in the efficiency and effectiveness of auditors’ performance. This study has several contributions to the literature.

Audit in the digital economy

Introduction. The rapid transformational processes of the economy and the mass digitization of all spheres of life require clear, coherent and systematic approaches to the construction of their activities from the subjects of audit activity. Ukraine is not lagging behind in the introduction of the latest forms of control, and therefore actively incorporates the experience of EU countries into the domestic audit practice. Such a form of control, which is actively introduced into the practice of control and verification work, taking into account the experience of EU countries, is e-audit. 
 Problem. Serious concerns among users of financial statements, business entities, and entities of audit activities are caused by a massive increase in the amount of data, which requires interested users to search for new, progressive approaches to the construction of their activities, in particular, in terms of a conceptual change in the approach to the construction of the work of audit activities. 
 The aim of the study is to reveal the essence of the concept of «e-audit» and critically assess theore­tical and practical approaches to the transformation of audit activity in the context of modern business challenges. 
 Methods. General scientific and special methods are used: theoretical generalization and grouping, formalization, analysis and synthesis; logical generalization of the results. 
 Results. An author’s approach to revealing the essence of the conceptual and categorical apparatus of electronic audit has been formed. 
 Conclusions. A conceptual and categorical apparatus of electronic audit has been developed, within which: the concept of «e-audit» is substan­tiated (systematic, independent and documented audit of the correctness, completeness, timeliness and compliance of data (operations, reporting and other documents), which is carried out using modern digital – technologies that automate processes and contribute to more effective achievement of the goal of electronic audit tasks), in which, unlike existing definitions, a systematic approach was applied, which allowed to characterize it from economic and audit approaches to the definition. This contributes to the deepening of the understanding of the essence of concepts, the unification of the terminological apparatus to increase the efficiency of decision-making in the field of control and verification work.

Effect of Demographic Factors, Occupational Stress and Job Satisfaction on Dysfunctional Audit Behaviour among Auditors

This study aims to examine the factors of dysfunctional behaviour among auditors in Malaysia. Factor analysis was employed to analyse three factors (1) demographic factors (a type of firm and period of audit experience), (2) Occupational stress (time budget pressure and complexity of audit task) and (3) Job Satisfaction that affects dysfunctional audit behaviour which is reduced audit quality and underreporting time. A questionnaire was distributed among 223 respondents employed by the Big 4 and non-Big 4 audit firms located in Kuala Lumpur and Selangor. The findings revealed that all the tested variables have a significant influence towards reduced audit quality, whereas underreporting time show a non-significant relationship with demographic factors. The findings are anticipated to provide beneficial insights not only to audit practitioners but to many other regulators, professional bodies, policy makers, practitioners and academics that are relevant to their future decisions. This study is also subject to limitations that serve as consideration for future research. Keywords: Dysfunctional Audit Behaviour; Audit Behaviour Factors; Fraud Detection; Audit Quality eISSN: 2398-4287© 2021. The Authors. Published for AMER ABRA cE-Bs by e-International Publishing House, Ltd., UK. This is an open access article under the CC BYNC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer–review under responsibility of AMER (Association of Malaysian Environment-Behaviour Researchers), ABRA (Association of Behavioural Researchers on Asians/Africans/Arabians) and cE-Bs (Centre for Environment-Behaviour Studies), Faculty of Architecture, Planning & Surveying, Universiti Teknologi MARA, Malaysia. DOI: https://doi.org/10.21834/ebpj.v7iSI7%20(Special%20Issue).3886