Implications to the Audit Process of Auditing that uses Data Analytics Tools and New Business Models

Tatenda Mugwira of the School of Business and Law at the University of Agder has submitted his thesis entitled «Implications to the Audit Process of Auditing that uses Data Analytics Tools and New Business Models»  and will defend the thesis for the PhD-degree Thursday 27 April 2023.

He has followed the PhD programme at the School of Business and Law at the University of Agder.

Summary of the thesis by Tatenda Mugwira:

New advances in information technology have created a wave of technological innovations which affect the audit firms. Audit firms are now investing large sums of money to acquire and adopt data analytics tools. Using three studies in this dissertation, I investigated questions relating to the impact of digital tools in the audit process. These studies are briefly summarized below.

The first study investigates whether the audit evidence from a process mining tool provides information that adds to the appropriateness (relevance) of the audit evidence collected by traditional analytical procedures. The results shows that auditors do perceive evidence from a process mining tool to express information that is relevant for both the planning and substantive stages of the audit even though the auditor’s risk assessment was higher in the substantive stage as compared to the planning stage. In addition, the results also shows that there was no difference in the auditor’s assessment of the relevance of the information presented in graph format and in written text format as both are considered equally relevant in the planning and substantive stages.

The second study investigates the unintended consequences in auditor’s decision making of using digital tools with powerful visualization abilities in the audit process. Specifically, the study investigates whether auditors make their decisions based on the relevance of the information to the decision to be made when using both visual audit evidence and text evidence or their decision will be based on a bias. The results shows that when auditors are presented with different information presented in different formats (visual or text), they are most likely to use the piece of information presented in visual rather than using the piece of audit evidence which is relevant to the decision.

The third paper analyses the fraud case of a financial technology company Wirecard using the fraud triangle as the theoretical framework. The results shows that of the three factors identified in the fraud triangle, opportunity was the most prevalent factor and rationalization was least observable.

Implications of the study

The overall implications of the dissertation is that digital tools can provide information which is useful in the audit process as they provide relevant information which adds to the appropriateness (relevance) of information already contained in the traditional analytical procedures. However, the dissertation informs the reader that in as much as the digital tools (especially those with strong visual abilities) bring these benefits to the auditor’s decision-making process, these tools are still prone to judgment bias which might unintentionally jeopardize the benefits associated with visual audit evidence.

What to do as an online audience member:

The disputation is open to the public, but to follow the trial lecture and the public defence digitally, transmitted via the Zoom conferencing app, you have to register as an audience member on this link:

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We ask online audience members to join the virtual trial lecture at 10:05 at the earliest and the public defense at 11:50 at the earliest. After these times, you can leave and rejoin the meeting at any time. Further, we ask online audience members to turn off their microphone and camera and keep them turned off throughout the event. You do this at the bottom left of the image when in Zoom. We recommend you use ‘Speaker view’. You select that at the top right corner of the video window when in Zoom.

Opponent ex auditorio:

The chair invites members of the public to pose questions ex auditorio in the introduction to the public defense. Deadline is during the break between the two opponents. The person asking questions should have read the thesis. For online audience the Contact Persons e-mail are available in the chat function during the Public Defense, and questions ex auditorio can be submitted to Gunvor Guttormsen on e-mail gunvor.guttormsen@uia.no