Manual de la Secretaría de Derechos Humanos de la Nación, 2015.

This section starts with a summary of findings related to both research questions 1 and 2 on the current use of ADA in large audit firms in New Zealand. This is followed by a summary addressing both research questions 3 and 4 on the determinants of the use of ADA among large audit firms in New Zealand.

5.1.1 Research questions one and two

RQ1: How are audit firms in New Zealand currently using ADA?

RQ2: What are the similarities and differences in the current use of ADA between audit

136

Use of ADA is described by this study in terms of the type of data and tools involved, the policies and guidelines in place around use of ADA, the extent of use in current audit engagements (i.e. what portion of the current audit engagements of audit firms utilise ADA?), and among staff (i.e. who, within the audit firm, uses ADA?), and use of ADA in different stages of the audit process.

The type of data involved, in particular structured client data, is common among all case firms, and the type of tools used are generally a combination of proprietary tools and off-the-shelf tools. It is found that where proprietary tools are not available or are on trial, firms mainly rely on generalised audit analytic tools to perform ADA. However, the distinction between the functionalities of proprietary tools and generalised audit analytic tools is not clear. Further, the use of ADA other than journal entry testing (JET) is generally voluntary, and guidelines around the use of ADA are not in a standardised form across the firms.

In terms of the use of relatively ‘advanced’ ADA tools and procedures involving more disaggregated data, the degree of use in current engagements of participating firms is perceived as low. Other than that, all members of the audit staff and other relevant staff (e.g. specialist staff) use some form of ADA, with their specific involvement varying between firms according to the structure that they adopt: specialist or generalist. The specialist structure refers to the existence of a specialist team which provides relatively advanced analytics service to the audit team. The generalist structure refers to when a firm’s ADA capabilities lies only within its audit team.

Use of ADA is apparent in all stages of the audit: planning, compliance and substantive testing, evaluation and review, and reporting. The purposes of ADA use in these stages are common across all the firms with little variations. On the other hand, use of ADA in the first and last stages (pre-engagement and continuous activities) is limited, whereby use mentioned in the continuous

137

activities phase is either infrequent or being trialled. Nevertheless, these findings support that ADA can potentially be applied across all stages of the audit process (Appelbaum et al., 2018).

5.1.2 Research questions three and four

RQ3: What are the determinants of use (or non-use) of ADA among audit firms in New

Zealand?

RQ4: What are the similarities and differences in the determinants of use (or non-use) of

ADA between audit firms in New Zealand?

The determinants of the use of ADA can be categorised into three components: technological factors, organisational factors and environmental factors. Technological factors influencing use of ADA include perceived relative advantage, perceived ease of use and technological capability. Perceived relative advantage and technological capability are two significant determinants that may encourage or dissuade use of ADA. Whether perceived relative advantage will encourage or dissuade use of ADA depends on the significance of the perceived relative advantage, and whether it outweighs the cost and risk that may be incurred by using ADA. Technological capability looks at the firm’s existing ADA tools and staff technical competence. Greater technological capability encourages use of ADA, and limitations arising from technological capability dissuades use of ADA.

Organisational factors influencing use of ADA include firm structure, global parent, organisational strategy, reputation, management attitude and staff acceptance. Between the different firm structures identified, the specialist firm structure was found to be the most significant factor encouraging use of ADA as identified by all three participating firms that adopt this structure.

138

This is mainly due to the specialist team being able to perform ADA more consistently on a frequent basis. Other than that, two significant organisational factors are management attitude and staff acceptance. These two factors may be factors encouraging or dissuading use, depending on the behaviours displayed by management or staff. It should be noted that these two factors may be interrelated whereby, for example, the management’s attitude towards ADA may influence staff acceptance of it. In addition to this, an interesting finding related to staff acceptance is the perception of the use of ADA as being enjoyable or fulfilling, which encourages its use. This finding is further discussed in 5.4 ‘Unintended benefits of audit data analytics use’.

Environmental factors influencing use of ADA include clients, competition, regulators and audit industry. With all six participating firms agreeing on this, clients are an important determinant both encouraging and dissuading use of ADA, depending on the client’s characteristics, perceptions towards audit and perceptions towards ADA. Competition is an important determinant encouraging use of ADA. Regulators, particularly with regards to the existing auditing standards, is mainly perceived to be a factor dissuading use of ADA. In contrast, the audit industry is mostly seen to be encouraging use of ADA as it relates to the general trend of finding ways to improve effectiveness and efficiency of work processes to address increasing client and regulatory pressures.