Prepare for Takeoff: Improving Asset Measurement and Audit Quality with Drone-Enabled Inventory Audit Procedures
35 Pages Posted: 7 Mar 2019 Last revised: 20 Aug 2019
Date Written: August 20, 2019
Auditors increasingly employ technologies to improve audit quality. We examine whether using drones and automated counting software can improve audit quality and thereby improve asset measurement and financial reporting. We assess three dimensions of audit quality—efficiency, effectiveness, and quality of audit documentation. We provide evidence that auditors can perform inventory counts with these technologies 1,413 to 3,474 percent more efficiently than using manual techniques, while decreasing error rates by as much as 487 percent, and providing higher-quality audit documentation. Interviews with national-level partners and audit standard setters provide evidence that additional regulatory guidance in this domain would spur greater adoption of these technologies in audits.
Keywords: Drones, Automated Software, Inventory Counting, Inventory, Design Science
JEL Classification: M4, M40, M41, M42, M49, O30, O31
Suggested Citation: Suggested Citation