Lazarus Fotoh, newly graduated doctor of business administration at Karlstad Business School, tell us what you have done in your research.
– Considering that the impact of technology on auditing is still unclear, my research explores and helps improve our understanding of how both advanced and less advanced technologies are changing audits and the way they are carried out. I also looked into why, despite the growing attention given to advanced technologies, their adoption in auditing remains slow.
Why did this interest you?
– This research area interested me because, earlier in my career as an auditor, I came across several professional articles suggesting that advanced technologies could take over simple, routine and repetitive tasks usually done by junior auditors, like I was at the time. That sparked my initial curiosity, partly because I felt threatened by the idea of losing my job. There was also a lot of discussion about how these technologies could improve the efficiency, effectiveness, and overall quality of audits. Given my background in auditing, I became increasingly interested in studying emerging technologies in the audit profession.
Can you put your research in some context
– Auditing is essential for ensuring that businesses are playing fair and for supporting the financial stability of companies, especially by providing assurance regarding financial statements. However, as businesses adopt more complex technologies and generate vast amounts of data, audits are becoming increasingly difficult. The traditional approach of manual auditing based on sample data is struggling to keep up with these changes and has raised questions about the reliability of audit evidence. My research explores how advanced technologies can help auditors gather sufficient audit evidence and improve the overall audit process. It also examines the reasons why auditors are hesitant to adopt these technologies, even though they could make audits more efficient and effective.
In what way could your research be of use?
– First, my research can help audit firms understand how advanced technologies might reduce audit users’ expectations of auditors, thereby improving how auditors are perceived. It also highlights how cost-sensitive audit firms, particularly smaller audit firms, can benefit from using even less advanced technologies in audit processes. However, audit firms should be mindful of the limitations of these technologies and take steps to address them in order to fully benefit. These less advanced technologies can also be especially useful for collecting audit evidence and communicating with audit clients when physical observation is constrained.
– In addition, the findings are relevant for audit regulators, as they underscore the need to develop proactive standards and guidelines for using technology in auditing. For researchers, the thesis provides a categorisation of seven areas where advanced technologies are likely to gradually transform audits. It also presents key factors influencing the adoption of emerging technologies, grouped into internal, external, and other factors.
Are there any specific findings that you could tell us about?
– Yes, I found that advanced technologies are helping to transform audits by making them more efficient and effective while also narrowing the expectation gap between what auditors do and what users expect them to do.
– Despite their limitations, less advanced technologies are also valuable. They can improve the audit process, particularly by supporting evidence collection and communication when auditors cannot be physically present, for example, during travel restrictions or other limiting situations. These tools can even be partially used to collect inventory audit evidence.
– I also found that the slow adoption of advanced technologies in auditing is influenced by several factors. These include internal issues within audit firms, external pressures, and other barriers. A major challenge is the lack of clear, proactive standards and guidelines to support their use.
In what way will your research strengthen Karlstad Business School?
– It shows that Karlstad Business School is engaged in cutting-edge research that keeps up with current trends and addresses real-world issues. The research bridges academic knowledge with the practical challenges faced by audit firms, further supporting the Business School’s mission of conducting research with societal impact.
– And despite all the talk about the potential of advanced technologies, they are not so commonly employed in auditing. Also, I believe that technologies will not replace human auditors but will help them work smarter by allowing them to focus on more complex and judgment-oriented audit tasks. This can increase the value of audits and potentially enhance audit quality. I also agree with many contemporary researchers who see technology as an audit assistant that facilitates repetitive and routine tasks, while the auditor remains fully responsible for the entire audit process.
