In a rapidly evolving work environment shaped by the COVID-19 pandemic, a recent study by Tien-Shih Hsieh, Zhenyang Tang, Zhihong Wang, and Kyunghee Yoon examines how workforce technology competency influences audit quality under remote working conditions. Published in the Journal of Information Systems, the research reveals significant insights into the challenges faced by auditors and the mitigation strategies that can enhance audit quality.
The study highlights that following the onset of COVID-19, the transition to remote auditing has raised concerns about audit quality, as access to client documentation has become increasingly difficult. Through an analysis of comprehensive labor market data, the authors measured client firms’ workforce technology competency and found that companies with higher technology competency experienced a less pronounced deterioration in audit quality compared to those with lower competency.
Using a dataset of U.S. public companies from 2017 to 2020, the researchers discovered that discretionary accruals—an indicator of audit quality—significantly increased post-COVID-19. This increase underscores the challenges auditors faced in adapting to remote audits. However, firms that demonstrated greater technology competency were better equipped to maintain audit quality during this transition.
The authors propose that enhancing technological human capital within firms can lead to more effective remote auditing practices. This assertion is supported by findings indicating that companies with a more skilled workforce in technology were able to provide better digital evidence, thus resulting in a lower negative impact on audit quality.
This research serves as a critical reminder for regulatory bodies and industry professionals about the importance of investing in technology and training to bolster audit quality in an increasingly remote work environment. The implications extend beyond academia, suggesting that firms need to focus on developing their workforce’s technology skills to ensure sustainable auditing practices moving forward.
As remote working arrangements are likely to persist, understanding and addressing the technological competencies of audit clients becomes essential in safeguarding audit quality. To read more about the methodologies and findings of this pivotal study, the full article is available here.