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    Transforming audit technologies: Business risk audit...
    research summary posted May 4, 2012 by The Auditing Section, last edited May 25, 2012, tagged 06.0 Risk and Risk Management, Including Fraud Risk, 06.05 Assessing Risk of Material Misstatement 
    Transforming audit technologies: Business risk audit methodologies and the audit field
    Practical Implications:

    The findings of the study emphasize the importance of considering history when understanding how changes in the auditing profession occur (such as the emergence of the BRA, which the authors explore in this study).  Though audit firms have stated that they initially implemented BRA methodologies in response to the challenge of the “information age” and corporate clients’ assurance needs, the authors propose that BRA served as a legitimacy tool for the auditing profession, changed the identity of accounting firms, and enabled audit firms to maintain broader areas of expertise.  


    Robson, K., Humphrey, C., Khalifa, R., and J. Jones. 2007. Transforming audit technologies: Business risk audit methodologies and the audit field. Accounting, Organizations, and Society 32(5): 409 – 438.

    Risk and Risk Management, including Fraud Risk
    Purpose of the Study:

    Drawing on theories of legitimacy, professional knowledge, and science and technology, this study seeks to understand the promotion and use of the Business Risk Audit (BRA) approach.  The authors suggest the BRA allowed audit firms to renegotiate their professional identities and status and expand their jurisdictional claims over broader areas of expertise.  The authors develop a framework of “theory for audit change” that highlights how audit firms gain and maintain legitimacy and how audit technology evolves and changes.

    Design/Method/ Approach:

    The research evidence is collected starting in 1996, and the authors utilize the major accounting firms’ publications, brochures, and websites (i.e., materials describing the BRA; a key example is a KPMG Monograph titled “Auditing Through a Strategic-Systems Lens: the KPMG Business Measurement Process” (KPMG 1997)), in concert with documentary material from professional accounting institutes and interviews with audit partners and senior managers from UK accounting firms. Within the written evidence, the authors conduct a textual analysis, examining both verbal characteristics of the language and latent meanings of the words.

    • The authors observe that during the late 1990s and early 2000s, audits tended to be viewed as a commodity, primarily because audit firms treated auditing as a “gateway” to providing more lucrative non-audit services. 
    • The authors argue that the legitimacy of the audit process lies within “the statutory frame in which audit requirements are embedded” and is also dependent on the association of auditor expertise with cultural codes and values such as efficiency, rationality, and science. 
    • The authors suggest that the emergence of the BRA as a technology to add value to the audit process was an attempt to increase the prestige of the audit profession and give it a new identity.  The authors link the emergence of the BRA with the increased use of more strategic and risk-based approaches taken by client managers.  Accordingly, the BRA generated a value added audit via knowledge spillovers that enabled the auditor to add value both with respect to business risks and the related accounting implications. 
    • The development of the BRA approach allowed audit services to be integrated with the “value-added” nature of the other expert services provided by public accounting firms. The depiction of audit as a value-added service is consistent with the AICPA’s attempts to characterize audit professionals as global knowledge experts.
    Risk & Risk Management - Including Fraud Risk
    Assessing Risk of Material Misstatement
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