Digital transformation and the public sector auditing: The SAI's perspective

Abstract

The ongoing transformation of supreme audit institutions (SAIs) external environment is changing the demands and expectations of its stakeholders. The changing environment triggered by technological advancements, increased demand for accountability, and transparency means a change in the way auditing is done. The literature provides evidence of an ongoing technological innovation within the private sector audit. Private sector auditing research has focused mainly on technology adoption and use failing to address the umbrella concept of digital transformation (DT), some even consider processes of DT such as technology adoption and use to be DT. The public sector auditing literature is still yet to commence DT-related research. This study seeks to fill in this gap and after presenting what DT entails, we applied an exploratory approach through semistructured interview responses, together with other documents from SAIs, to understand how SAIs currently perceive DT and what are their current reactions or actions to transform. The paper analyzes and discusses how SAIs perceive and define the DT phenomenon. The results show that most SAIs still do not master the concept of DT, as they often refer to technology adoption or automation of auditing processes to be DT, notwithstanding a great majority acknowledges the need for DT but lacks the right strategy and resources in place. We saw a few proactive SAIs who are futuristic on the contrary a majority are reacting to change when the need arises, especially during the audit process. The paper provides one of the first empirical investigations into the current DT of public audits. It also proposes a general framework suitable for analyzing the factors involved in the DT in SAIs.