The Data Analytics Journey: Interactions among Auditors, Managers, Regulation, and Technology

53 Pages Posted: 3 Aug 2018 Last revised: 3 Apr 2020

See all articles by Ashley A. Austin

Ashley A. Austin

University of Richmond

Tina Carpenter

University of Georgia - C. Herman and Mary Virginia Terry College of Business

Margaret H. Christ

University of Georgia - Terry College of Business

Christy Nielson

University of Mississippi; affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: March 20, 2020

Abstract

Data analytics is transforming our global markets. Companies’ investments in data analytics are projected to grow to more than $274 billion in the next few years, and audit firms are pledging to invest an unprecedented $9 billion. While auditors, company managers, regulators, and academics agree that data analytics is fundamentally changing the financial reporting and auditing processes, we currently have little empirical research investigating the complexities related to the diffusion of this new technology. In this study, we interview matched dyads of company managers (e.g., CFOs) and their respective audit partners, as well as regulators and data analytics experts to provide a rich understanding of how interactions between these stakeholders affect the dissemination of this innovation throughout financial reporting and auditing. We use socio-technical systems of innovation theory as a lens through which to view our findings as this theory highlights the importance of dynamic interactions between people and their environments, including rules and regulations. We find that managers and auditors see themselves as partners on a journey together exploring new tools, taking new paths, and learning from one another. However, like with any journey into a new frontier, managers and auditors describe pitfalls and struggles along the way due to tensions related to regulatory interactions, independence concerns, strategic negotiations over audit fees, and competitive pressures. Our study contributes to research, practice, and regulation by shining a light on these critical interactions between accounting stakeholders, which shape the diffusion of innovative technologies like data analytics.

Keywords: Accounting; Audit Quality; Financial Reporting Quality; Data Analytics; Fraud; Audit Fees

Suggested Citation

Austin, Ashley A. and Carpenter, Tina and Christ, Margaret H. and Nielson, Christy, The Data Analytics Journey: Interactions among Auditors, Managers, Regulation, and Technology (March 20, 2020). Available at SSRN: https://ssrn.com/abstract=3214140 or http://dx.doi.org/10.2139/ssrn.3214140

Ashley A. Austin

University of Richmond ( email )

28 Westhampton Way
Richmond, VA 23173
United States
804-426-5422 (Phone)

Tina Carpenter

University of Georgia - C. Herman and Mary Virginia Terry College of Business ( email )

230 Brooks Hall
Athens, GA 30602-6254
United States
706-542-3619 (Phone)

Margaret H. Christ (Contact Author)

University of Georgia - Terry College of Business ( email )

Athens, GA 30602-6254
United States
706-542-3602 (Phone)

Christy Nielson

University of Mississippi ( email )

Oxford, MS 38677
United States

affiliation not provided to SSRN

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