The IT Auditor Function on Financial Statement and Integrated Audits: Description of Practice and Avenues for Future Research

• In Event: Oversight

Abstract

IT plays a critical role in the production of financial statements, and thus, audits over financial statements. However, audit standards provide limited guidance related to the reliance on IT and use of IT auditors; academic literature is sparse on these topics as well. We seek to fill this gap by gaining an understanding of the IT auditor function on financial statement and integrated audits in today’s environment, especially in light of recent PCAOB concerns over undue reliance on IT as a root cause of ICFR-related audit deficiencies. We analyze data obtained from 33 interviews with practicing financial and IT auditors using a research question framework highlighting key points in the audit process. We posit a number of interesting implications including 1) involvement of IT auditors in audits is a relatively subjective process and thus social and behavioral forces could have a significant influence on the way the two teams work together, 2) while IT auditors are typically involved in planning, the extent can vary and there is likely room for increased involvement, especially around fraud-related procedures, and 3) financial and IT auditors have contrasting views on whether increased involvement of IT auditors on business process-related work is needed, but both groups cited the need for mutual respect and knowledge in both domains. Our findings provide a foundation for academic researchers to identify important research issues, develop theory-based predictions, and design experiments (or other models and instruments) to address these issues. Our study also has broad implications for future research in other audit specialist areas, such as tax and valuation.

Authors

• Tim David Bauer, University of Illinois at Urbana–Champaign

• Cassandra Ruth Estep, University of Illinois at Urbana–Champaign