2019B02 - Engaging auditors’ innovation mindset to improve fraud detection with data analytics (Prof. dr. Gold)
In this study, we examine whether the use of an (inflexible) work program and encouraging auditors to identify value-added insights during the course of the audit impairs their judgments (i.e., fraud detection and identification of appropriate follow-up audit procedures), thereby inadvertently decreasing audit quality. Additionally, we draw from psychology theory on flexibility and investigate whether adding flexibility to the audit work programs that incorporate data analytics can improve auditors’ ability to manage their competing goals so that they can maintain appropriately levels of professional skepticism and conduct a high-quality audit.
Audit firms are increasingly employing data analytics during the audit, which allows them to more thoroughly examine large quantities of client data. They are investing significantly in developing audit programs that feature data analytics, particularly in the area of fraud detection. However, research suggests that the inflexibility of traditional audit work programs can inhibit auditors’ professional skepticism and development of effective procedures for detecting fraud. In addition to citing improved audit quality as a key benefit of data analytics, auditors also indicate that they use this powerful tool to provide value-added insights to the client throughout the course of the audit. This adds a new goal into auditors’ already crowded set of motivations and prior research suggests that the introduction of additional goals can decrease one’s performance on existing goals, and
regulators are concerned about the impacts on auditor independence and professional skepticism.
Back to overview