Keywords

internal audit, automation, budgeting, assurance, technology, AI

Abstract

Technological advances that automate work continue to transform the accounting profession. We examine whether automation impacts resource allocation within the internal audit function (IAF), a unique setting that allows us to compare demand for assurance activities with demand for consulting activities. We conduct an experiment in which experienced board members, executives, and internal auditors make budget recommendations for a company’s IAF that developed automations that improved the efficiency of the IAF. Results show that across all groups, participants respond to these efficiencies by decreasing the IAF’s total budget but retaining the productive capacity of the IAF. The budget cuts are targeted at the IAF’s assurance activities and not at its consulting activities. Moreover, participants across all groups endorse further automation, anticipating its positive impact on the IAF. Overall, our results suggest companies respond to automation by redirecting efficiency gains towards activities other than assurance activities.

Original Publication Citation

Emett, Scott A. and Eulerich, Marc and Pickerd, Jeffrey Scott and Wood, David A., Reassessing Assurance in an Automated World: Insights from Board Members, Executives, and Internal Auditors (March 1, 2024). Available at SSRN: https://ssrn.com/abstract=4744611 or http://dx.doi.org/10.2139/ssrn.4744611

Document Type

Peer-Reviewed Article

Publication Date

2024

Publisher

SSRN

Language

English

College

Marriott School of Business

Department

Accountancy

University Standing at Time of Publication

Full Professor

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Accounting Commons

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