The Impact of Client’s Information Technology Capabilities on Audit Efficiency

• In Event: Continental Breakfast - Research and Education Forum
  In Roundtable Session: Table 9: Clients' Accounting Systems and the External Audit

Abstract

This paper explores the question: Do companies with superior IT capabilities enjoy more efficient, i.e., quicker and lower cost, audits than those firms with less advanced IT capabilities? It employs data on companies that are listed on the Information Week 500 from 2004 to 2012 as a proxy for firms with superior IT resources. Controlling for factors found in prior research to influence audit fees and audit reporting lag, evidence suggests that companies with superior IT capabilities enjoy lower levels of audit fees when controlling for company size, decreased growth in audit fees and timelier reporting. And among those companies with superior IT capabilities, the firms recognized as the “best of the best,” realize reduced audit fees however exhibit no differences in terms of timeliness of reporting. The implications of these findings and opportunities for additional research are discussed.

Authors

• Benjamin Hoffman, Kent State University

• R. Drew Sellers, Kent State University