Impact of Technological Advancements on Auditing of Financial Statements

• Published in: European research studies Vol. XXVI; no. Issue 4; pp. 131 - 159
• Main Authors: Joshua, Daniel, Edgard, Reginato, Luciane, Benetti, Cristiane
• Format: Journal Article
• Language: English
• Published: 01.10.2023
• Subjects: Business administration; Humanities and Social Sciences; 5.0 Technology; Computer Assisted Audit Techniques; Auditing Technology; Innovation; International Standards on Auditing; Artificial Intelligence; ISA; IT Auditing; CAAT
• ISSN: 1108-2976
• DOI: 10.35808/ersj/3277

Purpose: This study sought to analyse the impacts of technological advances and innovations on auditing of financial statements.Design/Methodology/Approach: The research methodology is qualitative, drawing on interpretive and constructivist perspective. In doing so, answers the question of how the auditing has been impacted by information technology. It exercises content analysis on data gathered from corporate webpages of larger auditing firms predominantly the Big Four, Webinar organized by one of the Big four firms on October 2022, Data from 13th Ibracon Conference organized by Institute of Independent Auditors of Brazil in June 2023 and documents comprising the International Auditing Standards (ISA) and at the end categorizing analysis into templates. Findings: Show that the auditing has been technologically impacted by Computer Assisted Audit Techniques (CAAT) tools, Capacity building of the IT auditor, Artificial Intelligence in auditing, Deep learning in auditing and Emerging Technological impact of Continuous Auditing of Blockchain. Generally, auditing is technologically impacted in three manners, planning of an engagement, during the performance and during the reporting stages. Impact is also felt with the innovative technologies such as supervised-AI for data extraction and exception analysis. IoT, Drones monitoring with satellite imagery, Remote Sensing, Deep Learning and Robotic Process Automation. Practical Implications: Constituting the innovations being implemented at different paces by the auditing firms. However, ISA has not obliged the auditors to use this or that technology leaving them to their pace. To drive down innovation in auditing team, this study recommends that IS and IT expertise be incorporated in the financial auditing engagement team for appropriate development and not just treating them as expert service. Originality/Value: The study contributes to theories in as much as it provides relevant input/output for discussions of technological impacts on auditing to assist practitioners, regulators and policymakers.