The impacts of the use of data analytics and the performance of consulting activities on perceived internal audit quality

Nathanael Betti (n.vellekoop@utoronto.ca), Steven DeSimone (sdesimon@holycross.edu) and Joy Gray (jgray@bentley.edu)
Additional contact information
Nathanael Betti: University of Toronto
Steven DeSimone: College of the Holy Cross
Joy Gray: Bentley University
Authors registered in the RePEc Author Service: Nathanaël Vellekoop

No 2202, Working Papers from College of the Holy Cross, Department of Economics

Abstract: Purpose- This research investigates the effects of the internal auditor use of data analytics and the performance of consulting activities on perceived internal audit quality. Design/methodology/approach- We conducted a 2x2 between-subjects experiment among upper and middle managers where the use of data analytics and the performance of consulting activities by internal auditors were manipulated. Findings- Results indicate that managers perceive internal auditors as more competent when they use data analytics and that managers perceive that the quality of their relationship with internal auditors is higher when internal auditors perform consulting activities. They also perceive that internal auditors’ recommendations are more relevant when they perform consulting activities. In addition, findings show an interaction effect where the use of data analytics with the performance of consulting activities strengthens the perceived quality of the relationship between internal auditors and management. Research limitations/implications- From a theoretical perspective, this research builds on the internal audit quality framework by considering digitalization as a contextual factor. This research focused on one major stakeholder of the internal audit function- senior management. Future research can investigate the perceptions of other stakeholders. Practical implications- From a managerial perspective, the implications of this research indicate that internal auditors should prioritize the development of the consulting role in their function and develop their digital expertise, especially regarding data analytics. Originality- This research tests the impacts of the use of data analytics and the performance of consulting activities on perceived internal audit quality holistically, by testing Trotman and Duncan (2018)’s framework through an experiment..

Pages: 36 pages
Date: 2022-03
New Economics Papers: this item is included in nep-acc
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