Digital audit talent's impact on audit digitization and detection risk

Area of Science:

• Auditing and Accounting
• Information Systems
• Risk Management

Background:

• Digital transformation is reshaping industries, including auditing.
• The role of digital audit talent in mitigating detection risk requires further investigation.
• Understanding the interplay between talent, digitization, and risk is crucial for modern audit practices.

Purpose of the Study:

• To examine if and how digital audit talent adequacy influences detection risk.
• To investigate the mediating role of audit digitization in this relationship.
• To analyze the heterogeneity of this effect across different audit institution sizes.

Main Methods:

• Empirical analysis using data from the Chinese Institute of Certified Public Accountants (2020-2022).
• Statistical modeling to assess the impact of digital audit talent and audit digitization on detection risk.
• Examination of moderating effects based on audit institution size.

Main Results:

• Adequacy of digital audit talent significantly reduces detection risk.
• Digital audit talent positively impacts audit digitization, but digitization itself can elevate detection risk.
• The relationship between digital audit talent and detection risk shows significant variation across audit institutions of different sizes.

Conclusions:

• Digital audit talent is a key factor in mitigating detection risk within the context of audit digitization.
• Audit institutions need tailored strategies considering their size to leverage digital talent effectively.
• Findings contribute to the Resource-Based View by detailing talent, technology, and risk transmission paths.