Abstract:
This study examines the differences between strategic systems audit approach compared with traditional based audit approach and its impact on development of auditors’ knowledge of the client’s business, has been discussed. Strategic systems audit approach advocates argue that this approach creates a better development of auditors’ knowledge of the client’s business than the traditional-based audit approach.
Statistical population in this study, auditors (with different positions) employed in Auditing Organization in Iran was determined. The study sample selection (auditors) had been done randomly and questionnaire was distributed between auditors. The statistical results indicate that the auditors should be chosen about 90 people who are working in Auditing Organization. The data analyzed with F and t-student test to test the research hypotheses. Normal data test were used with Kolmogorov-Smirnov test.
The results had showed auditors that used strategic systems audit approach have better knowledge of the client’s business than the traditional based audit approach.
Machine summary:
"Table 1- Comparison of Transaction-based and Strategic-Systems Audit Approaches Transaction-based Approach Strategic-Systems Approach Transaction Orientation Based on the notion that the whole can be discerned by examining the parts Holistic Orientation Based on the belief that the broader context infuses meaning into the parts Focus on the Information Process Through an understanding of the interrelationships among reported information, one is able to develop a sound expectation model about performance Focus on the Business Processes Presumes the objectives of the business strategy are delivered through key processes; therefore a sound expectation model must be based on a review of strategy and process indicators Expert Knowledge of Accounting and Auditing Relies on in-depth understanding of auditing procedures and accounting rules predominantly to enable the attester to verify consistencies and detect anomalies Expert Knowledge of Business Considers a broader understanding of the entity and its environment to contribute significantly to the attester’s ability to verify consistencies and detect anomalies Discrete Systems Comprehends systems as disconnected from one another, generating unrelated transactions that can be reviewed by individuals working independently Networked Understands the organization as a dynamic network whose systems cannot be examined in isolation Audit Risk Based on belief that opinions about financial statements can be issued independently from a commentary on the client business risk Business Risk Considers the financial-statement opinion to be inextricably connected to a broader assessment of client business risk Adapted from Bell et al.
Another study had used data from a laboratory experiment to examine whether (1) being trained to use either or transaction-focused approach and (2) analyzing information organized in a strategic-systems approach or transaction- focused approach format influence the extent to which auditors integrate knowledge of business risk into their judgment about the likelihood of financial misstatement."