Working Paper: Technology-Based Audit Tools: Exploring the Current State and Future Direction
Abstract: Collectively, the world's largest public accounting firms plan to invest over $9 billion into technology development and initiatives before 2025. These investments coincide with audit regulators, audit committees, and researchers worldwide undertaking initiatives to understand the benefits, challenges, and risks associated with the proliferation of technology-based audit tools available to external audit engagement teams. Using proprietary data, this study identifies and describes the purposes, functions, and other properties of the eight largest US public accounting firms’ suites of technology-based auditing tools currently available or under development. While Big 4 firms have five (two and a half) times as many tools available (under development) as Next 4 firms, the differences are less pronounced in the tools’ purposes and functions. Consistent with decentralized decision-making theory, tool usage is primarily an engagement-level decision rather than directed by firm policy. Tools under development are intended to improve both audit efficiency and audit quality.
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