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    Drivers of the Use and Facilitators and Obstacles of the...
    research summary posted September 21, 2015 by Jennifer M Mueller-Phillips, tagged 08.0 Auditing Procedures – Nature, Timing and Extent 
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    Title:
    Drivers of the Use and Facilitators and Obstacles of the Evolution of Big Data by the Audit Profession.
    Practical Implications:

    “The scale and scope of changes that Big Data are bringing about are at an inflection point, set to expand greatly, as a series of technology trends accelerate and converge.” (McKinsey Global Institute) There are very few true disruptive innovations that induce such an inflection point: a situation in which the existing trajectory of long-used practices come to be seen as no longer sustainable and business heads off in an entirely new direction. Whether Big Data will prove to be a disruptive force is still an open question. However, if that does indeed prove to be the case, then auditors should heed the warnings that the firms that succeed past the inflection point are often not the ones that precede it. 

    Citation:

    Alles, M. G. 2015. Drivers of the Use and Facilitators and Obstacles of the Evolution of Big Data by the Audit Profession. Accounting Horizons 29 (2): 439-449.

    Keywords:
    auditing, Big Data, disruptive innovation, ERP
    Purpose of the Study:

    Given both its promise and the challenges Big Data pose to businesses in general, this paper examines the drivers of the use of Big Data by the audit profession and the facilitators and obstacles for how that use will evolve in the near future. Drivers refer to the exogenous forces that will make the use of Big Data a historical inevitability and a strategic necessity, as opposed to an entirely endogenous choice by auditors based on their preferences alone. Facilitators and obstacles are the factors that determine how Big Data usage will evolve in audit practice, with auditing standards identified as the most significant facilitator and the lack of trained personnel as potentially the greatest obstacle.

    Given the growing attention paid by the business media and the investor community to Big Data, it is important to consider to what extent the audit profession will embrace Big Data and how its usage will evolve over time. Data is seen as a tool for businesses to uncover unforeseen correlations in data that can be exploited to increase profits by, for example, developing new marketing strategies. Auditing, however, is more constrained by standards and, in the case of external auditing, focused on the specific task of attesting to management assertions. The constraints of history and legal structure that impose on auditing have to be taken into consideration when analyzing the likely evolution of Big Data in auditing.

    Design/Method/ Approach:

    This article is a commentary.

    Findings:

    The author hypothesizes in this paper that auditor use of Big Data will likely not happen unless the failure to adopt Big Data is perceived by the audit profession as a serious threat. This paper posits that the most likely driver of the use of Big Data by auditors is client use of Big Data that auditors will feel that they have no choice but to embrace Big Data if and when Big Data becomes as important to the operation of the businesses of their clients in the next decade as ERP systems proved to be in the one before. In other words, the imperative to keep up with their clients’ reliance on Big Data is the exogenous driver that will force auditors to also adopt Big Data. Only when faced with such unavoidable exogenous pressure will Big Data become a strategic necessity and not just another option for auditors, just as they shifted away from the tactic of auditing around the computer and developed IT auditing when the ubiquity of ERP and other IT systems of their clients made overlooking information technology as an object of assurance and a tool of auditing, simply infeasible.

    Category:
    Auditing Procedures - Nature - Timing and Extent