The Data Analytics Transformation: Evidence From Auditors, CFOs, and Standard-Setters

51 Pages Posted: 3 Aug 2018 Last revised: 30 Jun 2019

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; University of Georgia

Date Written: June 28, 2019

Abstract

Data analytics is transforming our global markets. Auditors, CFOs, standard-setters, and academics recognize this phenomenon and generally agree that data analytics will fundamentally change financial reporting and auditing processes. However, we currently have little empirical research investigating the complexities related to the emergence of this new technology. In this study, we interview company managers (e.g., CFOs), audit partners, data analytics experts, and standard-setters to provide a richer view of the development, use, and diffusion of data analytics within financial reporting and auditing. Using socio-technical systems of innovation theory (S-T theory) to interpret our results, we gain insights into how the interactions of company managers, auditors, and standard-setters with each other and with the technology itself (data analytics) influence the emergence of data analytics. For example, we find that data analytics constrains managers’ and auditors’ actions by requiring uncommon skillsets and changing the team culture. Consistent with S-T theory, we also find that the emergence of data analytics affects interactions between company managers and their auditors. In particular, we find that disagreements about the audit fee model may cause conflict between managers and auditors in the future. Further, we find auditors increasingly provide data-driven insights to their clients and that standard-setters express concern that this practice may lead to impaired auditor independence. Our study contributes to the accounting literature and practice by providing theoretically-based insights about data analytics that are relevant to managers’ and auditors’ practices, standard-setting, and academic research.

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 Transformation: Evidence From Auditors, CFOs, and Standard-Setters (June 28, 2019). 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

University of Georgia ( email )

Athens, GA 30602-6254
United States

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