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

Posted: 19 Apr 2021

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 31, 2021

Abstract

Data analytics is transforming our global markets and significantly impacting the financial reporting environment. We investigate how auditors, company managers, and regulation interact with data analytics and one another to affect the diffusion (i.e., development and spread) of data analytics throughout the financial reporting environment. We interview company managers and their audit partners, as well as additional stakeholders, including regulators. We interpret findings from our interviews using theory that highlights the importance of dynamic interactions between people and their environments, which include the prevailing rules (e.g., regulatory guidance). Our findings contribute to the accounting literature and practice by revealing three areas of conflict emerging from stakeholders’ disparate preferences for data analytics. First, we uncover growing tensions between managers and audit partners regarding audit fees. Second, we find that managers and auditors believe the lack of accounting regulation specific to data analytics causes confusion and frustration. Finally, auditors report that they strategically leverage data analytics to provide clients with business-related insights. However, regulators voice concerns that this practice might impair auditor independence and reduce audit quality. These areas of conflict suggest a need to revisit key tensions surrounding the audit function in a contemporary context characterized with significant technological shift.

Keywords: accounting, audit fees, audit quality, data analytics, financial reporting quality, regulation

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 31, 2021). Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3826172

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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