This is because the use of IT not only ensures that the control of the audit process becomes more effective, but also changes the behavior of auditors (Dowling & Leech, 2014). During the planning phase, the audit decision process consists of a preliminary analytical procedure that conducts a test of the internal control system. The main cause of inaccurate assessments is the ambiguity of the data (Luippold & Kida, 2012).
Students as auditors' representatives were asked to evaluate the internal control system of a company's sales cycle based on the information provided to them. There were weaknesses in internal control that were only discovered during interaction between members of the audit team. The subjects were then asked three questions about the customer profile in order to assess their understanding of the given case.
Subjects who answered at least two questions correctly were deemed to have passed the test of understanding the customer's profile. Subjects assessed and scored the client's internal control system based on the information received. This review involves a brief analysis of the assessment of the client's business risk and internal control.
An example of the conversation between a subject in Group 1 (Insufficient and Complex data) and his audit team leader is provided in Appendix 4.
Findings
The first hypothesis was further tested at a more aggregate level using ANOVA to compare the audit decision based on three levels of ambiguity. The independent variable is the three levels of data ambiguity (insufficient and complex data; sufficient and complex data; . and sufficient and non-complex data) while the dependent variable is the result of the internal loop control system of sales (before the conversation) . Tables 4a and 4b present the descriptive statistics of the result of the internal control system of the three levels of ambiguity.
The ANOVA test shows the significant effect (at the 0.01 level) of information ambiguity on the accuracy of the audit decision. The second hypothesis predicts that an interactive GSS-based review improves the accuracy of the audit decision. They also informed the subjects of the findings of the interim audit, which means that the client suffered a high level of business risk and that there were some incomplete sales documents.
This was done by comparing the audit decision of the internal control system before using the GSS and the audit decision after using the GSS. The test of H2a compares the audit decisions based on insufficient and complex data before and after using GSS. The average value of the audit decision before using the GSS is 73.38, which implies a moderate rating level.
For H2b, the mean score for the audit decision when subjects received Sufficient and Complex Data is 74.40. Similarly, the audit decision for H2c under the condition of sufficient and non-complex data shows a score of 79.13, and after using GSS, the score drops to 63.91. The results show that GSS, as an interactive mechanism between subjects and audit team leaders, made subjects consider some important aspects of the client and then revised their decisions.
The above results show that interaction between members of the audit team even during the early stage of the audit engagement is essential for the audit team to arrive at a better or more accurate audit decision. From this it can be concluded that the GSS has a positive effect on the accuracy of the audit judgment. The average scores of the audit decision on the internal control system before GSS and after GSS are tabulated in table 7 below.1.
Discussion and Implication
There is empirical evidence showing that audit decisions made with insufficient and complex data differ significantly from audit decisions made with sufficient and complex data. Furthermore, it is noted that the score of the audit decisions of subjects in Cell 1 with insufficient and complex data (67.31) is lower than the score of the audit decisions of subjects in Cell 5 who were given sufficient and non-complex data (79.13). The subjects in Cell 1 considered the client's internal control to be weak based on the available data, which therefore implies that the information does not provide reasonable assurance.
Also, the score of cell 5 indicates that subjects relied on the information that was not ambiguous to them to make audit decisions. Other findings from this study indicate that the audit decisions of subjects in Cell 3 (Sufficient and Complex Data) do not differ from those of subjects in Cell 5 (Sufficient and Non-Complex Data). These results show that the subjects are not influenced by the information presented (sufficient and complex data, or sufficient and non-complex data).
Further, this study also showed that the audit decisions of entities provided with insufficient and complex data (Cell 1) differ significantly from the audit decisions of entities provided with sufficient and complex data (Cell 3). This phenomenon affected the quality of decision-making as shown by the score of 67.31. The highest score of the decision shows that the subjects perceived the reliability of the internal control even though there were weaknesses in the internal control system.
The importance of GSS in the entity's audit decision-making was tested in hypothesis 2 which will be discussed below. Based on the findings of the first hypothesis test, it can be concluded that the level of information ambiguity affects decision making. When data is presented in several information sets, data fluctuation requires a more complex analysis and a deeper cognitive process to determine the cause of the fluctuation.
In the tests for Hypothesis 2, which were divided into H2a, H2b and H2c, it was shown that the GSS process can change subjects' decision. The audit team leaders' assessment emphasized the importance of topics that consider other factors that could potentially impact the internal control assessment, including the client's business risk. Carson and Dowling (2012) argue that the use of information technology in audits increases competitive advantage.
Conclusion
GSS, a computer-mediated form of communication, allows subjects to interact simultaneously with audit team leaders to resolve their issues. In addition, GSS will increase the competitive advantage for auditors by making the review process more efficient. This study examined the impact of GSS by manipulating communication with a single leader.
In practice, however, auditors are also likely to communicate with other members of the audit team. In addition, this study focused on audit decisions that used internal control evaluation with analytical procedure during the planning stage. Future research could be conducted to investigate the impact of information ambiguity on audit decisions during other stages such as the testing and evaluation stage.
Electronic Versus Personal Review: The Effects of Alternative Forms of Review on Auditors. The competitive advantage of audit support systems: the relationship between structure scope and audit prices. The Big 4's Use of Information Technology to Control the Audit Process: How an Audit Support System Changes Auditor Behavior.
Decision-making performance of interacting groups: An experimental study of the effects of task type and communication mode. The Effects of a Supervisor's Active Intervention in Subordinates' Ratings, Directional Goals, and Perceived Technical Knowledge Advantage on Audit Team Ratings. An empirical assessment of the impact of alternative task presentation modes on decision-making research in auditing.
Effects of expectations, prior involvement, and revision awareness on memory for audit evidence and judgment. World Bank Report on the Current Status of the Accounting and Auditing Profession in ASEAN Countries.
YOUR ROLE NEW CLIENT
TASK
You are asked to estimate the value of the sales cycle internal control system based on existing information. How sufficient is the availability of information to determine the value of the internal control system of the sales cycle. Based on the information available, please determine the value of the internal control system for the customer's sales cycle.
Chat session between a subject from group 1 (insufficient and complex data) and the audit team leader. LEADER>: You and your team are assigned to assess the internal control system of PT XYZ Indonesia Furniture's Internal Control System. LEADER>: What information do you use to assess the internal control system of the sales system.
LEADER> : Is there already complete information to evaluate the internal control system of the sales system. Based on our assessment, our client's business risk is HIGH. The client has uncertain future business continuity. Based on the discussion with the partner, please determine the final value of PT XYZ Indonesia Furniture Internal Control System.
How sufficient is the information from audit team leader to be used to determine the value of internal control system of sales cycle.
