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The transformation to data analytics in Big-Four financial audit: what, why and how?

Angela Liew (Department of Accounting and Finance, The University of Auckland, Auckland, New Zealand)
Peter Boxall (Department of Management and International Business, The University of Auckland, Auckland, New Zealand)
Denny Setiawan (Department of Information Systems and Operations Management, The University of Auckland, Auckland, New Zealand)

Pacific Accounting Review

ISSN: 0114-0582

Article publication date: 3 May 2022

Issue publication date: 2 August 2022

2148

Abstract

Purpose

This study aims to explore the implementation of data analytics in the Big-Four accounting firms, including the extent to which a digital transformation is changing the work of financial auditors, why it is doing so and how these firms are managing the transformation process.

Design/methodology/approach

The authors conducted 23 interviews with 20 participants across four hierarchical levels from three of the Big-Four accounting firms in New Zealand.

Findings

The firms have entered the era of “smart audit systems”, in which auditors provide deep business insights that are communicated more effectively through data visualisation. The full potential, however, of data analytics depends not only on the transformation process within accounting firms but also on improvement in the quality of IT systems in client companies. The appointment of transformation managers, the recruitment of technology-savvy graduates and the provision of extensive training are helping to embed data analytics in the Big-Four firms. Accounting graduates in financial audit now need to show that they have the aptitude to become “citizen data scientists”.

Practical implications

The findings explain how data analytics is being embraced in the Big-Four auditing firms and underline the implications for those who work in them.

Originality/value

The findings challenge the “technological reluctance” thesis. In contrast, the authors observe a climate of positive attitudes towards new technology and accompanying actions in the Big-Four firms. The authors show how branches of the Big-Four firms operating distantly from their global headquarters, and with smaller economies of scale, are implementing the new technologies that characterise their global firms.

Keywords

Acknowledgements

This study was supported by two research grants: at first from the Accounting and Finance Association of Australia and New Zealand (AFAANZ), and later from the University of Auckland Foundation Fund.

Citation

Liew, A., Boxall, P. and Setiawan, D. (2022), "The transformation to data analytics in Big-Four financial audit: what, why and how?", Pacific Accounting Review, Vol. 34 No. 4, pp. 569-584. https://doi.org/10.1108/PAR-06-2021-0105

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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