Impact of Digital Transformation on Internal Audit Quality

Abstract

There have been many developments in internal audit over time in terms of standards, organizational dependency, independence, emergence of digital transformation and its relationship to improving internal auditing quality and role in assessing risks. Internal audit is fundamental in maintaining transparency in dissemination of information about a company’s financial position and performance. In this respect, digital transformation is essential for improving internal audit quality.

This study aims to examine association between digital transformation and internal audit quality by studying and analyzing nature and importance of internal auditing of digital transformation mechanisms as an application of information technology, revealing significant areas of examination that internal audit department should focus on to verify efficiency and effectiveness of digital transformation strategies, and to extract the most important elements activating internal audit activities of digital transformation mechanisms in light of governing professional standards and publications, clarifying nature of risks and challenges associated with implementation of these mechanisms, and identifying their repercussions on enhancing accountability and transparency and improving performance.

The two researchers relied with regard to design/methodology/approach on each both the deductive approach: analyzing what was mentioned in Arab and foreign studies related to research variables and inductive approach: they followed survey method to collect primary data using a structured questionnaire, which included questions directed to internal auditors, accountants and university professors to collect information about digital transformation impact on internal audit quality. Questionnaire is low-cost and economical, through which the largest amount of information can be obtained, respondent privacy is preserved, the largest number of respondents can be reached, and quantitative data is provided to researchers that are easy for them to analyze, and because it is kept confidential, answers would be more frank, accurate, and not limited by time limits.

Study results and statistical analysis revealed that digital transformation has positive relationship with internal audit quality. The Study recommended that the importance of publishing new regulations and law to govern using the digital transformation on internal audit to secure and protect users. The study also recommended that using digital transformation in all corporate activities for reducing the costs. Finally, the profession of audit should leverage their strategic ways and methods of work to be adapted for the new generation of technology otherwise they face a problem of how to justify their costs.