Research Opportunities in Information Technology Auditing: Addressing Recommendations of the Panel on Audit Effectiveness

By Nearon, Bruce H. | The CPA Journal, April 2001 | Go to article overview

Research Opportunities in Information Technology Auditing: Addressing Recommendations of the Panel on Audit Effectiveness


Nearon, Bruce H., The CPA Journal


News Views Personal Viewponit "The profession will need to restore the historic attractiveness of auditing as a profession and convince the 'best' people it offers excellent longterm career opportunities," concludes the report of the Public Oversight Board's Panel on Audit Effectiveness (the O'Malley Panel). "This is an effort that will require a partnership among audit firms, professional societies, and the academic community."

These recommendations can be carried out only if the Auditing Standards Board (ASB) provides the necessary initial funding for the Research Opportunities in Information Technology Auditing, ROITA, program. The purpose of the ROTTA program would address the IT issues raised in the POB report. As discussed in its executive summary, rapid technological advances and changes in financial systems are forcing audit firms to reconsider their audit methods and deploy large numbers of IT specialists. Challenges include auditing financial systems that increasingly rely on complex IT systems and a dwindling number of auditors with adequate IT skills.The proposed ROTA program focuses on these issues.

The potential benefits of the ROITA program can be seen in the Peat, Marwick, Mitchell & Company's Research Opportunities in Auditing (ROA) program, which ran from 1976 to 1993. The ROA program had a direct influence on audit judgment decision aids, audit sampling, analytical procedures, audit reports, audit risk models, and many ASB standards.

For almost 60 years, the profession has recognized the divergence of research, education, and practice. In the process, some researchers, educators, and practitioners have questioned the value of the profession's core products-generally accepted accounting practices (GAAP) and generally accepted auditing standards (GAAS).

The proposed ROITA program, which could help sustain and advance core products, would emphasize traditional financial statement IT auditing according to GAAS.There is a large demand for GAAS audits, which are required by law, regulation, or charter for all SEC registrants, thousands of government agencies, municipalities, nonprofit organizations, and large financial institution borrowers. According to GAAS, auditors are required to understand the underlying IT systems these organizations use, yet there are no generally accepted IT auditing principles and little theory. There appears to be little basis, beyond ad hoc practice, for the panel's recommended IT audit standards. As such, the ROITA program could be the catalyst for academics to develop and publish a framework of principles and theory for IT audit standards, an area they have long neglected.

Neither current nor foreseeable technology would disrupt the profession's auditing franchise or its market permission to provide other services. Current and foreseeable technology can be leveraged to strengthen the viability, value, and profitability of traditional financial statement audits.

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Research Opportunities in Information Technology Auditing: Addressing Recommendations of the Panel on Audit Effectiveness
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