The impact of corporate digital transformation on audit efficiency considering the role of audit firm competence
Subject Areas :
1 - Assistant Professor, Department of Accounting, ShQ.C., Islamic Azad University, Shahr-e Qods, Iran
Keywords: Digital transformation, audit efficiency, audit delay,
Abstract :
Purpose: The digital economy has become a significant growth point in the business world. In this context, digital transformation, which is the foundation of the development of the digital economy, has become an inevitable choice for the survival and sustainable development of companies. Digital transformation will change the organizational risk and information environment and will also bring challenges to the audit profession.
Methodology: This study takes 141 companies listed on the Tehran Stock Exchange from 2016 to 2023 as a sample to study the impact of a company's digital transformation on audit efficiency, considering the role of audit firms' competence. The research method of the current research is applied and its research design is of semi-experimental type using post-event approach (through past information). In order to test the hypotheses of the research, multivariate linear regression based on panel data was used using EViews software.
Findings: The results of this study showed that the higher the degree of organizational digital transformation, the more serious the audit delay and the lower the audit efficiency. Also, when companies are audited by non-A-rated audit firms, the impact of a company's digital transformation on reducing audit efficiency is more evident.
Originality: This study expands the research field of digital transformation and organizational auditing and provides empirical evidence for improving audit efficiency.
References:
افسای، اکرم (1403). فراترکیب عوامل موثر بر اتخاذ فناوری در حسابرسی. پژوهش‌های حسابرسی حرفه‌ای، 4(16)، 8-37. doi: 10.22034/jpar.2024.2009391.1204
درویشی، محمدعلی و بهرامی، علی (1402). تحول دیجیتال شرکتی چگونه بر سطح اجتناب از مالیات شرکتی تاثیر می گذارد؟ (شواهد تجربی از شرکت های گردشگری چینی ثبت شده). ششمین کنفرانس بین المللی تحولات نوین در مدیریت، اقتصاد و حسابداری، تهران. https://civilica.com/doc/1861675
زارع، حمید، حاجیها، زهره، و کیقبادی، امیررضا (1403). بررسی تاثیر استفاده از هوش مصنوعی بر کیفیت فرایند حسابرسی صورت‌های مالی. پژوهش‌های حسابرسی حرفه‌ای، 4(16)، 38-65. doi: 10.22034/jpar.2024.2011220.1224
رجائی، امید و خیامی، سیدرئوف و خیامی، سیدعلیرضا (1401). بلوغ دیجیتال در سازمان های کوچک و متوسط: مرور ابعاد مورد توجه، چالش ها و ضرورت ها. ششمین همایش ملی پیشرفت های معماری سازمانی، تهران. https://civilica.com/doc/1672749
Abbott, L. J., Parker, S., & Peters, G. F. (2012). Internal audit assistance and external audit timeliness. Auditing: A Journal of Practice & Theory, 31(4), 3-20. doi: 10.2308/ajpt-10296
Afsay, A. (2024). A meta-synthesis of factors affecting the adoption of technology in the auditing. Professional Auditing Research, 4(16), 8-37. doi: 10.22034/jpar.2024.2009391.1204 [In Persian]
Akter, S., Michael, K., Uddin, M. R., McCarthy, G., & Rahman, M. (2022). Transforming business using digital innovations: The application of AI, blockchain, cloud and data analytics. Annals of Operations Research, 1-33. doi: 10.1007/s10479-020-03620-w
Appelbaum, D., Kogan, A., & Vasarhelyi, M. A. (2017). Big data and analytics in the modern audit engagement: Research needs. Auditing: A Journal of Practice & Theory, 36(4), 1-27. doi: 10.2308/ajpt-51684
Baatwah, S. R., Al‐Ebel, A. M., & Amrah, M. R. (2019). Is the type of outsourced internal audit function provider associated with audit efficiency? Empirical evidence from Oman. International Journal of Auditing, 23(3), 424-443. doi: 10.1111/ijau.12170
Bamber, E. M., Bamber, L. S., & Schoderbek, M. P. (1993). Audit structure and other determinants of audit report lag: An empirical analysis. Auditing: A Journal of Practice & Theory, 12(1). https://www.proquest.com/docview/216739816
Brazel, J. F., & Agoglia, C. P. (2007). An examination of auditor planning judgements in a complex accounting information system environment. Contemporary Accounting Research, 24(4), 1059-1083. doi: 10.1506/car.24.4.1
Brennan, N. M., Subramaniam, N., & Van Staden, C. J. (2019). Corporate governance implications of disruptive technology: An overview. The British Accounting Review, 51(6), 100860. doi: 10.1016/j.bar.2019.100860
Caligiuri, P., De Cieri, H., Minbaeva, D., Verbeke, A., & Zimmermann, A. (2022). International HRM insights for navigating the COVID-19 pandemic: Implications for future research and practice. In Crises and Disruptions in International Business: How Multinational Enterprises Respond to Crises (pp. 417-454). Cham: Springer International Publishing. doi: 10.1007/978-3-030-80383-4_17
Cameran, M., Ditillo, A., & Pettinicchio, A. (2018). Audit team attributes matter: How diversity affects audit quality. European Accounting Review, 27(4), 595-621. doi: 10.1080/09638180.2017.1307131
Che, L., Hope, O. K., & Langli, J. C. (2020). How big-4 firms improve audit quality. Management Science, 66(10), 4552-4572. doi: 10.1287/mnsc.2019.3370
Chen, W., & Srinivasan, S. (2024). Going digital: Implications for firm value and performance. Review of Accounting Studies, 29(2), 1619-1665. doi: 10.1007/s11142-023-09753-0
Chen, X., Cho, Y. H., Dou, Y., & Lev, B. (2022). Predicting future earnings changes using machine learning and detailed financial data. Journal of Accounting Research, 60(2), 467-515. doi: 10.1111/1475-679X.12429
Chi, M., Ye, D., Wang, J., & Zhai, S. (2020). How can Chinese SMEs improve the new product development performance? From the perspective of digital empowerment. Nankai Business Review, 23(03), 63-75.
Coleman, B., Merkley, K., & Pacelli, J. (2022). Human versus machine: A comparison of robo-analyst and traditional research analyst investment recommendations. The Accounting Review, 97(5), 221-244. doi: 10.2308/TAR-2020-0096
Darvishi, M. A., & Bahrami, A. (2023). How does corporate digital transformation affect the level of corporate tax avoidance? (Empirical evidence from registered Chinese tourism companies). 6th International Conference on New Developments in Management, Economics and Accounting, Tehran. https://civilica.com/doc/1861675 [In Persian]
Kang, J.K., Lennox, C., Pandey, V. )2022(. Client concerns about information spillovers from sharing audit partners. J. Account. Econ. 73 (1), 101434. doi: 10.1016/j.jacceco.2021.101434
Leng, A., & Zhang, Y. (2024). The effect of enterprise digital transformation on audit efficiency—Evidence from China. Technological Forecasting and Social Change, 201, 123215. doi: 10.1016/j.techfore.2024.123215
Li, Y.M., Chu, Y.W., & Yang, Z.H. )2015(. Study on influencing factors of annual report audit delay: from the perspective of internal control quality group. The Chinese Certified Public Accountant .6, 50–56. doi: 10.1016/j.jms.2014.12.013
Lugli, E., & Bertacchini, F. (2023). Audit quality and digitalization: some insights from theItalian context. Meditari Accountancy Research, 31(4), 841-860. doi: 10.1108/MEDAR-08-2021-1399
Lou, P., & Zhou, X. (2024). Digital transformation, green innovation, and audit fees. Frontiers in Environmental Science, 12, 1323282. doi: 10.3389/fenvs.2024.1323282
Masli, A., Peters, G. F., Richardson, V. J., & Sanchez, J. M. (2010). Examining the potential benefits of internal control monitoring technology. The Accounting Review, 85(3), 1001-1034. doi: 10.2308/accr.2010.85.3.1001
Moll, J., & Yigitbasioglu, O. (2019). The role of internet-related technologies in shaping the work of accountants: New directions for accounting research. The British accounting review, 51(6), 100833. doi: 10.1016/j.bar.2019.04.002
Munsif, V., Raghunandan, K., & Rama, D. V. (2012). Internal control reporting and audit report lags: Further evidence. Auditing: A Journal of Practice & Theory, 31(3), 203-218. doi: 10.2308/ajpt-50190
Murthy, U. S., Park, J. C., Smith, T., & Whitworth, J. (2023). Audit efficiency and effectiveness consequences of accounting system homogeneity across audit clients: a new form of knowledge spillover?. The Accounting Review, 98(2), 389-418. doi: 10.2308/TAR-2020-0609
Nambisan, S., Lyytinen, K., Majchrzak, A., & Song, M. (2017). Digital innovation management. MIS quarterly, 41(1), 223-238. https://www.jstor.org/stable/26629644
Nambisan, S., Wright, M., & Feldman, M. (2019). The digital transformation of innovation and entrepreneurship: Progress, challenges and key themes. Research policy, 48(8), 103773. doi: 10.1016/j.respol.2019.03.018
Piccinini, E., Hanelt, A., Gregory, R., & Kolbe, L. (2015). Transforming industrial business: The impact of digital transformation on automotive organizations. https://web.archive.org/web/20200323000530id_/https://aisel.aisnet.org/cgi/viewcontent.cgi?
Rajaee, O. & Khayami, S. R., & Khayami, S. A. R. (2022). Digital Maturity in Small and Medium-Sized Organizations: Review of Considerations, Challenges and Necessities. The Sixth National Conference on Enterprise Architecture Advances, Tehran. https://civilica.com/doc/1672749 [In Persian]
Sun, Q., Sun, Y., & Jiang, J. (2024). Research on the impact of digital transformation of energy enterprises on stock price fluctuation. Journal of Intelligent & Fuzzy Systems, (Preprint), 1-15. doi: 10.3233/JIFS-232161
Tanyi, P., Raghunandan, K., & Barua, A. (2010). Audit report lags after voluntary and involuntary auditor changes. Accounting horizons, 24(4), 671-688. doi: 10.2308/acch.2010.24.4.671
Warner, K. S., & Wäger, M. (2019). Building dynamic capabilities for digital transformation: An ongoing process of strategic renewal. Long range planning, 52(3), 326-349. doi: 10.1016/j.lrp.2018.12.001
Warren, J. D., Moffitt, K. C., & Byrnes, P. (2015). How big data will change accounting. Accounting Horizons, 29(2), 397-407. doi: 10.2308/acch-51069
Wu, K., & Lu, Y. (2023). Corporate digital transformation and financialization: Evidence from Chinese listed firms. Finance Research Letters, 57, 104229. doi: 10.1016/j.frl.2023.104229
Wu, W.Q., Zhao, Y., Su, Z.H., (2022). Corporate IT construction and audit fees — new evidence in the era of digitalization? Audit. Res. 225 (01), 106–117. doi: 10.1117/12.2660800
Xu, C.Y., Lu, J.Y., Kai, Z., (2022). Study on the path of digital enabling accounting firms to reduce audit risk. Friends Account. 19, 12–17. doi: 10.54097/fbem.v9i2.9297
Zare, H., Hajiha, Z., & Keyghobadi, A. (2024). Investigating the impact of using artificial intelligence on the quality of the financial statement audit process. Professional Auditing Research, 4(16), 38-65. doi: 10.22034/jpar.2024.2011220.1224 [In Persian]
Zeng, C.L., Li, J.T., Zhang, M., Zeng, T.B., (2018). Could the informatization construction in accounting firm improve auditing effect? Account. Res. 06, 3–11. https://xueshu.baidu.com/usercenter/paper/show?paperid=1j1q0g802h3t0cn0bd7c0mw0e4475079
Zhang, R., Gao, W., Chen, S., Zhou, L., & Li, A. (2024). Dose digital transformation contribute to improving financing efficiency? Evidence and implications for energy enterprises in China. Energy, 300, 131271. doi: 10.1016/j.energy.2024.131271
Zhang, Y., Yang, G., Zhang, D., & Wang, T. (2021). Investigation on recognition method of acoustic emission signal of the compressor valve based on the deep learning method. Energy Reports, 7, 62-71. doi: 10.1016/j.egyr.2021.10.053
Zheng, Q.W., Zhu, L., Xu, J.Y., Hu, N. (2022). The effectiveness of communications between predecessor and successor auditors and audit quality. Account. Res. 02, 179–191. doi: 10.1111/1753-0407.13258
Zhong, Y.H., Feng, J.K., Feng, C.Y., Wang, X., (2022). Does enterprise digital transformation affect audit fee? Finance and Accounting Monthly. 22, 96–104. doi: 10.3847/1538-4357/ac71ad
افسای، اکرم (1403). فراترکیب عوامل موثر بر اتخاذ فناوری در حسابرسی. پژوهش‌های حسابرسی حرفه‌ای، 4(16)، 8-37. doi: 10.22034/jpar.2024.2009391.1204
درویشی، محمدعلی و بهرامی، علی (1402). تحول دیجیتال شرکتی چگونه بر سطح اجتناب از مالیات شرکتی تاثیر می گذارد؟ (شواهد تجربی از شرکت های گردشگری چینی ثبت شده). ششمین کنفرانس بین المللی تحولات نوین در مدیریت، اقتصاد و حسابداری، تهران. https://civilica.com/doc/1861675
زارع، حمید، حاجیها، زهره، و کیقبادی، امیررضا (1403). بررسی تاثیر استفاده از هوش مصنوعی بر کیفیت فرایند حسابرسی صورت‌های مالی. پژوهش‌های حسابرسی حرفه‌ای، 4(16)، 38-65. doi: 10.22034/jpar.2024.2011220.1224
رجائی، امید و خیامی، سیدرئوف و خیامی، سیدعلیرضا (1401). بلوغ دیجیتال در سازمان های کوچک و متوسط: مرور ابعاد مورد توجه، چالش ها و ضرورت ها. ششمین همایش ملی پیشرفت های معماری سازمانی، تهران. https://civilica.com/doc/1672749
Abbott, L. J., Parker, S., & Peters, G. F. (2012). Internal audit assistance and external audit timeliness. Auditing: A Journal of Practice & Theory, 31(4), 3-20. doi: 10.2308/ajpt-10296
Afsay, A. (2024). A meta-synthesis of factors affecting the adoption of technology in the auditing. Professional Auditing Research, 4(16), 8-37. doi: 10.22034/jpar.2024.2009391.1204 [In Persian]
Akter, S., Michael, K., Uddin, M. R., McCarthy, G., & Rahman, M. (2022). Transforming business using digital innovations: The application of AI, blockchain, cloud and data analytics. Annals of Operations Research, 1-33. doi: 10.1007/s10479-020-03620-w
Appelbaum, D., Kogan, A., & Vasarhelyi, M. A. (2017). Big data and analytics in the modern audit engagement: Research needs. Auditing: A Journal of Practice & Theory, 36(4), 1-27. doi: 10.2308/ajpt-51684
Baatwah, S. R., Al‐Ebel, A. M., & Amrah, M. R. (2019). Is the type of outsourced internal audit function provider associated with audit efficiency? Empirical evidence from Oman. International Journal of Auditing, 23(3), 424-443. doi: 10.1111/ijau.12170
Bamber, E. M., Bamber, L. S., & Schoderbek, M. P. (1993). Audit structure and other determinants of audit report lag: An empirical analysis. Auditing: A Journal of Practice & Theory, 12(1). https://www.proquest.com/docview/216739816
Brazel, J. F., & Agoglia, C. P. (2007). An examination of auditor planning judgements in a complex accounting information system environment. Contemporary Accounting Research, 24(4), 1059-1083. doi: 10.1506/car.24.4.1
Brennan, N. M., Subramaniam, N., & Van Staden, C. J. (2019). Corporate governance implications of disruptive technology: An overview. The British Accounting Review, 51(6), 100860. doi: 10.1016/j.bar.2019.100860
Caligiuri, P., De Cieri, H., Minbaeva, D., Verbeke, A., & Zimmermann, A. (2022). International HRM insights for navigating the COVID-19 pandemic: Implications for future research and practice. In Crises and Disruptions in International Business: How Multinational Enterprises Respond to Crises (pp. 417-454). Cham: Springer International Publishing. doi: 10.1007/978-3-030-80383-4_17
Cameran, M., Ditillo, A., & Pettinicchio, A. (2018). Audit team attributes matter: How diversity affects audit quality. European Accounting Review, 27(4), 595-621. doi: 10.1080/09638180.2017.1307131
Che, L., Hope, O. K., & Langli, J. C. (2020). How big-4 firms improve audit quality. Management Science, 66(10), 4552-4572. doi: 10.1287/mnsc.2019.3370
Chen, W., & Srinivasan, S. (2024). Going digital: Implications for firm value and performance. Review of Accounting Studies, 29(2), 1619-1665. doi: 10.1007/s11142-023-09753-0
Chen, X., Cho, Y. H., Dou, Y., & Lev, B. (2022). Predicting future earnings changes using machine learning and detailed financial data. Journal of Accounting Research, 60(2), 467-515. doi: 10.1111/1475-679X.12429
Chi, M., Ye, D., Wang, J., & Zhai, S. (2020). How can Chinese SMEs improve the new product development performance? From the perspective of digital empowerment. Nankai Business Review, 23(03), 63-75.
Coleman, B., Merkley, K., & Pacelli, J. (2022). Human versus machine: A comparison of robo-analyst and traditional research analyst investment recommendations. The Accounting Review, 97(5), 221-244. doi: 10.2308/TAR-2020-0096
Darvishi, M. A., & Bahrami, A. (2023). How does corporate digital transformation affect the level of corporate tax avoidance? (Empirical evidence from registered Chinese tourism companies). 6th International Conference on New Developments in Management, Economics and Accounting, Tehran. https://civilica.com/doc/1861675 [In Persian]
Kang, J.K., Lennox, C., Pandey, V. )2022(. Client concerns about information spillovers from sharing audit partners. J. Account. Econ. 73 (1), 101434. doi: 10.1016/j.jacceco.2021.101434
Leng, A., & Zhang, Y. (2024). The effect of enterprise digital transformation on audit efficiency—Evidence from China. Technological Forecasting and Social Change, 201, 123215. doi: 10.1016/j.techfore.2024.123215
Li, Y.M., Chu, Y.W., & Yang, Z.H. )2015(. Study on influencing factors of annual report audit delay: from the perspective of internal control quality group. The Chinese Certified Public Accountant .6, 50–56. doi: 10.1016/j.jms.2014.12.013
Lugli, E., & Bertacchini, F. (2023). Audit quality and digitalization: some insights from theItalian context. Meditari Accountancy Research, 31(4), 841-860. doi: 10.1108/MEDAR-08-2021-1399
Lou, P., & Zhou, X. (2024). Digital transformation, green innovation, and audit fees. Frontiers in Environmental Science, 12, 1323282. doi: 10.3389/fenvs.2024.1323282
Masli, A., Peters, G. F., Richardson, V. J., & Sanchez, J. M. (2010). Examining the potential benefits of internal control monitoring technology. The Accounting Review, 85(3), 1001-1034. doi: 10.2308/accr.2010.85.3.1001
Moll, J., & Yigitbasioglu, O. (2019). The role of internet-related technologies in shaping the work of accountants: New directions for accounting research. The British accounting review, 51(6), 100833. doi: 10.1016/j.bar.2019.04.002
Munsif, V., Raghunandan, K., & Rama, D. V. (2012). Internal control reporting and audit report lags: Further evidence. Auditing: A Journal of Practice & Theory, 31(3), 203-218. doi: 10.2308/ajpt-50190
Murthy, U. S., Park, J. C., Smith, T., & Whitworth, J. (2023). Audit efficiency and effectiveness consequences of accounting system homogeneity across audit clients: a new form of knowledge spillover?. The Accounting Review, 98(2), 389-418. doi: 10.2308/TAR-2020-0609
Nambisan, S., Lyytinen, K., Majchrzak, A., & Song, M. (2017). Digital innovation management. MIS quarterly, 41(1), 223-238. https://www.jstor.org/stable/26629644
Nambisan, S., Wright, M., & Feldman, M. (2019). The digital transformation of innovation and entrepreneurship: Progress, challenges and key themes. Research policy, 48(8), 103773. doi: 10.1016/j.respol.2019.03.018
Piccinini, E., Hanelt, A., Gregory, R., & Kolbe, L. (2015). Transforming industrial business: The impact of digital transformation on automotive organizations. https://web.archive.org/web/20200323000530id_/https://aisel.aisnet.org/cgi/viewcontent.cgi?
Rajaee, O. & Khayami, S. R., & Khayami, S. A. R. (2022). Digital Maturity in Small and Medium-Sized Organizations: Review of Considerations, Challenges and Necessities. The Sixth National Conference on Enterprise Architecture Advances, Tehran. https://civilica.com/doc/1672749 [In Persian]
Sun, Q., Sun, Y., & Jiang, J. (2024). Research on the impact of digital transformation of energy enterprises on stock price fluctuation. Journal of Intelligent & Fuzzy Systems, (Preprint), 1-15. doi: 10.3233/JIFS-232161
Tanyi, P., Raghunandan, K., & Barua, A. (2010). Audit report lags after voluntary and involuntary auditor changes. Accounting horizons, 24(4), 671-688. doi: 10.2308/acch.2010.24.4.671
Warner, K. S., & Wäger, M. (2019). Building dynamic capabilities for digital transformation: An ongoing process of strategic renewal. Long range planning, 52(3), 326-349. doi: 10.1016/j.lrp.2018.12.001
Warren, J. D., Moffitt, K. C., & Byrnes, P. (2015). How big data will change accounting. Accounting Horizons, 29(2), 397-407. doi: 10.2308/acch-51069
Wu, K., & Lu, Y. (2023). Corporate digital transformation and financialization: Evidence from Chinese listed firms. Finance Research Letters, 57, 104229. doi: 10.1016/j.frl.2023.104229
Wu, W.Q., Zhao, Y., Su, Z.H., (2022). Corporate IT construction and audit fees — new evidence in the era of digitalization? Audit. Res. 225 (01), 106–117. doi: 10.1117/12.2660800
Xu, C.Y., Lu, J.Y., Kai, Z., (2022). Study on the path of digital enabling accounting firms to reduce audit risk. Friends Account. 19, 12–17. doi: 10.54097/fbem.v9i2.9297
Zare, H., Hajiha, Z., & Keyghobadi, A. (2024). Investigating the impact of using artificial intelligence on the quality of the financial statement audit process. Professional Auditing Research, 4(16), 38-65. doi: 10.22034/jpar.2024.2011220.1224 [In Persian]
Zeng, C.L., Li, J.T., Zhang, M., Zeng, T.B., (2018). Could the informatization construction in accounting firm improve auditing effect? Account. Res. 06, 3–11. https://xueshu.baidu.com/usercenter/paper/show?paperid=1j1q0g802h3t0cn0bd7c0mw0e4475079
Zhang, R., Gao, W., Chen, S., Zhou, L., & Li, A. (2024). Dose digital transformation contribute to improving financing efficiency? Evidence and implications for energy enterprises in China. Energy, 300, 131271. doi: 10.1016/j.energy.2024.131271
Zhang, Y., Yang, G., Zhang, D., & Wang, T. (2021). Investigation on recognition method of acoustic emission signal of the compressor valve based on the deep learning method. Energy Reports, 7, 62-71. doi: 10.1016/j.egyr.2021.10.053
Zheng, Q.W., Zhu, L., Xu, J.Y., Hu, N. (2022). The effectiveness of communications between predecessor and successor auditors and audit quality. Account. Res. 02, 179–191. doi: 10.1111/1753-0407.13258
Zhong, Y.H., Feng, J.K., Feng, C.Y., Wang, X., (2022). Does enterprise digital transformation affect audit fee? Finance and Accounting Monthly. 22, 96–104. doi: 10.3847/1538-4357/ac71ad
