Fraud Auditing in the Era of Big Data

Chiang, C. Catherine
Korol, Katherine
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The availability of Big Data has energized the public accounting industry in the development and use of technological tools for its assurance and advisory practices (Ernst and Young 2014). In this paper, we study the impact of Big Data on one of such services - fraud auditing. We conducted in-depth interviews with and distributed online survey to auditors in the field. We review and summarize changes that have been implemented in auditing procedures and identify the areas where regulations and guidance are lacking with regard to technology-enabled auditing procedures. We also discuss the changing role and skill sets required of auditors due to this rapidly evolving data and technological environment. The result of our survey and interviews revealed that the impact of Big Data on auditing practice is not universal across firms. Big Four accounting firms have deployed internally-developed Big Data analytical tools and transformed their audit procedures. However, significant disparity of organizational knowledge and availability of technological tools exist between big international accounting firms, regional firms, and small local firms. While changes are beginning to be tested and implemented in Big Four, the practice of smaller firms has not been altered by the presence of Big Data because the infrastructure is still not quite there for these firms and their clients.
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Big Data, Fraud, PCAOB, Auditing Standards
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