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The Acceptance and Adoption of Continuous Auditing by Internal Auditors: A Micro Analysis

The Acceptance and Adoption of Continuous Auditing by Internal Auditors: A Micro Analysis. Miklos A. Vasarhelyi Micheal Alles Siripan Kuenkaikaew James Littley. Introduction.

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The Acceptance and Adoption of Continuous Auditing by Internal Auditors: A Micro Analysis

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  1. The Acceptance and Adoption of Continuous Auditing by Internal Auditors: A Micro Analysis Miklos A. Vasarhelyi MichealAlles SiripanKuenkaikaew James Littley

  2. Introduction • Alles et al (2008) indicate that CA has moved over the last two decades from an academic vision (Vasarhelyi and Halper, 1991; Groomer and Murthy, 1989) to a vibrant and growing area of audit practice. • PwC survey in 2006 finds that 81 percent of 392 companies reported that they either had a continuous auditing or monitoring process in place or were planning to develop one. • ACL and the IIA survey shows that 36% of responding firms stating that they have adopted a CA approach across business processes or within select areas, and with another 39% planning to do so in the near future.

  3. Introduction • A survey does not allow a full understanding in details. • Meaning of CA to each company • Challenges and opportunities • The impact of CA on internal audit practice • This paper is case studies of CA technology adoption in a micro level. • To provide guidance to both audit practitioners and researchers about how CA is evolving. • The contribution we make is the unique degree of access we were able to obtain with internal auditors at some of the leading corporate users of continuous auditing systems.

  4. Methodology • We interviewed 22 internal audit managers and 16 internal audit staff members at 9 leading internal audit organizations. • The interviews were conducted face-to-face through site visits. • Interviewees were selected from the internal audit department. At least four employees were interviewed per organization to ensure validity, information completeness, and a range of points of view.

  5. Framework • The most widely used paradigm for studying the acceptance of technology is the Technology Acceptance Model (TAM), first proposed by Davis (1985, 1989). • The model consists of: • Perceived usefulness (PU): the degree to which a person believes that using a particular system would enhance his or her job performance • Perceived ease of use (PEU): the degree to which a person believes that using a particular system would be free from effort. • we rely on that model only to the extent of using it to frame our interview guide.

  6. Measuring the Degree of CA Adoption • We have developed an “Audit Maturity Model” that corresponds to the Technology Adoption Lifecycle model of Bohlen et at (1957) and Rogers (1962). • Our model emphasizes on how products and markets change as the technology becomes more refined and widely adopted. The Rogers’ Product Life Cycle Curve

  7. The Audit Maturity Model (1/2)

  8. The Audit Maturity Model (2/2)

  9. The Audit Maturity Model Traditional Emerging Maturing Continuous

  10. Results and analysis (1/2) • Most of the companies are at the foundation stage of CA/CM adoption. • Contrasts with the findings and internal audit surveys previously conducted. • Some companies have a certain level of CA/CM technology adoption such as Hi-tech1, Hi-tech 2 and Bank 1. •  External auditor can rely on internal audit work at some level. • Lacking audit aid tools such as working paper management and data analysis tools. • i.e. Consumer 1

  11. Results and analysis (2/2) • IA wants to improve audit competency and technology skill set. • Bank2 hires Big4 as a consultant to help in internal audit areas. • Lack of training for Audit aid tools and staff rotation • Consumer 1 is not successful with the ACL data analysis adoption. • Several companies have staff rotation program. • Audit like organization • With advanced auditing technology, sufficient access to data is facilitated; for instance, the continuous monitoring system of Bank 1 and the audit tools of Hi-tech 1. • Analyze data in various dimensions and at a deeper level

  12. Conclusion and limitation • Based on the result of the interviews, the status of CA adoption of the companies are ranked between stage 1, traditional audit, and stage 2, emerging according to the audit maturity model. • They are just in the initiation phrase, and there is opportunity for development in the future. Limitation • The limitation of this research is the generalization because of the small samples. • a structural survey research • the follow up interview

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