Perceived Audit Quality from ERP Implementations

The turbulent events of the global financial crises have highlighted the importance of audit quality. Auditing in today's business environment involves navigating through organizational information technology (IT) landscape dominated by ERP systems. Organizations depend on ERP systems for financial reporting which involve dealing with statutory and regulatory provisions. ERP systems thus, have become an integral part of compliance strategy due to their support for internal controls. ERP systems are associated with inherent system and business process complexities capable of carving new auditing landscape for auditors. However, the implications of such ERP-induced process changes and system complexities on audit quality have not been well understood and investigated. This study attempts to bridge this gap. The primary goal of this research is to frame business process complexity, system complexity and audit process as key predictors of audit quality as perceived by external auditors. Using empirical evidence gathered from auditors experienced in post-ERP audit, the research found that auditors' post-ERP perception in an audit due to ERP implementation influenced the perceived audit quality. Specifically, system complexity, audit process changes and control risk were significant determinants of perceived audit quality. In addition, the findings reveal business process complexity and system complexity as key antecedents of control risk in an ERP audit.

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An Analysis of Cross-Sectional Differences in Big and Non-Big Public Accounting Firms' Audit Programs

Auditing A Journal of Practice & Theory ◽

10.2308/aud.2006.25.1.27 ◽

2006 ◽

Vol 25 (1) ◽

pp. 27-48 ◽

Cited By ~ 70

Author(s):

Hans Blokdijk ◽

Fred Drieenhuizen ◽

Dan A. Simunic ◽

Michael T. Stein

Keyword(s):

Risk Assessment ◽

Empirical Evidence ◽

Audit Quality ◽

Audit Fees ◽

Public Accounting ◽

Accounting Firms ◽

Big 5 ◽

Public Accounting Firms ◽

Audit Approach ◽

Control Risk

A significant body of prior research has shown that audits by the Big 5 (now Big 4) public accounting firms are quality differentiated relative to non-Big 5 audits. This result can be derived analytically by assuming that Big 5 and non-Big 5 firms face different loss functions for “audit failures” and is consistent with a variety of empirical evidence from studies of audit fees, auditor changes, and the stock price reaction to audited earnings. However, there is no existing evidence (of which we are aware) concerning the underlying production differences between Big 5 and non-Big 5 audits. As a result, existing empirical evidence cannot distinguish between the possibility that Big 5 audits are simply perceived to be different (e.g., by investors) or actually differ in how they are produced. Our research objective is to identify the production characteristics of audit engagements that may explain the differences in expected audit quality between Big 5 and non-Big 5 firms. In this archival study, we examine the total audit effort and the allocation of effort to four audit phases—planning, (control) risk assessment, substantive testing, and completion—for a cross-section sample of 113 audits of Dutch companies in 1998/99 by 14 public accounting firms. We find that, after controlling for client characteristics: (1) both types of auditors exert about the same amount of total audit effort; (2) Big 5 auditors allocate relatively more effort to planning and (control) risk assessment, and relatively less to substantive testing and completion; and (3) client size, use of the business-risk-based audit approach, and reliance on client internal controls affect audit hours differently for the two auditor types. We conclude that the Big 5 firms actually produce a higher audit quality level, and that this quality difference is related to how audit hours are deployed in a more contextual and less procedural audit approach.

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The relationship between enterprise resource planning (ERP) implementation and intellectual capital under the moderating effect of organizational learning capability

10.26686/wgtn.17019200.v1 ◽

2021 ◽

Author(s):

◽

Quang Nguyen

Keyword(s):

Organizational Learning ◽

Enterprise Resource Planning ◽

Intellectual Capital ◽

Resource Planning ◽

Three Dimensions ◽

Erp Systems ◽

Erp Implementation ◽

Learning Capability ◽

Product Term ◽

Positive Effect

<p>Although Enterprise Resource Planning (ERP) systems alone are not the source of competitive advantage, they may do this indirectly through enhancing or supplementing the organization’s other strategic resources. Studies on ERP have not explicitly examined the interactions of ERP systems with other organizational capabilities to determine how investment in ERP systems can be leveraged into the creation of strategic resources of organizations. Further, ERP systems are large and complex, and the degree to which they are implemented throughout an organization can vary – this is described as the ERP scope. The scope of ERP implementation is believed to influence the degree of its effects on an organization. Relying on the literature on ERP effects, business value of information technology (IT) and the notion that organizations are learning systems which utilize their knowledge to create value and to accumulate further knowledge, this study examines the influence of the scope of ERP implementation on a strategic resource of organizations, namely intellectual capital, under the moderating effect of organizational learning capability. This study develops a research model to show the influence of the three dimensions of ERP implementation scope (breadth, depth, and magnitude) on intellectual capital and simultaneously the influence of organizational learning capability on these base relationships. The hypothesized relationships among variables are evaluated by a data set of 226 responses collected from manufacturing firms in Vietnam. With the support of SmartPLS version 2.0, the structural equation model is evaluated using the techniques of multiple regression analysis, and the moderation effects are analyzed using group comparison and product term approaches. The findings provide support for the hypotheses. The three dimensions of ERP implementation show a positive impact on intellectual capital. Organizational learning capability more or less moderates the relationship between ERP implementation scope and intellectual capital. As a result of the group comparison approach for moderation analysis, firms with a low level of learning capability are likely to have no effect of ERP implementation on intellectual capital. However, in the group with a high level of learning capability the breadth and magnitude of ERP implementation have a positive effect on intellectual capital. By using the product term approach, only the magnitude of ERP implementation shows an interaction effect with organizational learning capability on intellectual capital. The breadth and depth of ERP implementation appear to have minimal interaction with organizational learning capability. The results inform the literature on the business value of IT by demonstrating that an ERP system can become a strategic asset as its implementation has a positive effect on intellectual capital especially with the presence of a firm’s learning capability. Additionally, the research reveals another ERP effect (e.g. the effect on the intellectual capital of organizations) that complements the understanding of ERP effects that have been identified in prior studies. The findings practically contribute to managerial knowledge by showing that ERP implementation should not be considered in isolation, but rather organizations should build a substantial level of learning capability to fully obtain the positive effect of ERP implementation on intellectual capital.</p>

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The relationship between enterprise resource planning (ERP) implementation and intellectual capital under the moderating effect of organizational learning capability

10.26686/wgtn.17019200 ◽

2021 ◽

Author(s):

◽

Quang Nguyen

Keyword(s):

Organizational Learning ◽

Enterprise Resource Planning ◽

Intellectual Capital ◽

Resource Planning ◽

Three Dimensions ◽

Erp Systems ◽

Erp Implementation ◽

Learning Capability ◽

Product Term ◽

Positive Effect

<p>Although Enterprise Resource Planning (ERP) systems alone are not the source of competitive advantage, they may do this indirectly through enhancing or supplementing the organization’s other strategic resources. Studies on ERP have not explicitly examined the interactions of ERP systems with other organizational capabilities to determine how investment in ERP systems can be leveraged into the creation of strategic resources of organizations. Further, ERP systems are large and complex, and the degree to which they are implemented throughout an organization can vary – this is described as the ERP scope. The scope of ERP implementation is believed to influence the degree of its effects on an organization. Relying on the literature on ERP effects, business value of information technology (IT) and the notion that organizations are learning systems which utilize their knowledge to create value and to accumulate further knowledge, this study examines the influence of the scope of ERP implementation on a strategic resource of organizations, namely intellectual capital, under the moderating effect of organizational learning capability. This study develops a research model to show the influence of the three dimensions of ERP implementation scope (breadth, depth, and magnitude) on intellectual capital and simultaneously the influence of organizational learning capability on these base relationships. The hypothesized relationships among variables are evaluated by a data set of 226 responses collected from manufacturing firms in Vietnam. With the support of SmartPLS version 2.0, the structural equation model is evaluated using the techniques of multiple regression analysis, and the moderation effects are analyzed using group comparison and product term approaches. The findings provide support for the hypotheses. The three dimensions of ERP implementation show a positive impact on intellectual capital. Organizational learning capability more or less moderates the relationship between ERP implementation scope and intellectual capital. As a result of the group comparison approach for moderation analysis, firms with a low level of learning capability are likely to have no effect of ERP implementation on intellectual capital. However, in the group with a high level of learning capability the breadth and magnitude of ERP implementation have a positive effect on intellectual capital. By using the product term approach, only the magnitude of ERP implementation shows an interaction effect with organizational learning capability on intellectual capital. The breadth and depth of ERP implementation appear to have minimal interaction with organizational learning capability. The results inform the literature on the business value of IT by demonstrating that an ERP system can become a strategic asset as its implementation has a positive effect on intellectual capital especially with the presence of a firm’s learning capability. Additionally, the research reveals another ERP effect (e.g. the effect on the intellectual capital of organizations) that complements the understanding of ERP effects that have been identified in prior studies. The findings practically contribute to managerial knowledge by showing that ERP implementation should not be considered in isolation, but rather organizations should build a substantial level of learning capability to fully obtain the positive effect of ERP implementation on intellectual capital.</p>

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ERP Adoption

Enterprise Resource Planning Models for the Education Sector ◽

10.4018/978-1-4666-2193-0.ch009 ◽

2013 ◽

pp. 146-154

Author(s):

Jorge A. Romero

Keyword(s):

Empirical Evidence ◽

Enterprise Resource Planning ◽

Resource Planning ◽

Integrated Approach ◽

Company Performance ◽

Erp Systems ◽

Erp Implementation ◽

Strategic Investment ◽

Functional Systems

Enterprise Resource Planning (ERP) has been a major investment for most companies since the early nineties. ERP is a type of investment that has an integrated approach, and has been widely adopted, but there is little empirical evidence about how ERP implementation affects company performance. This chapter begins with the discussion of ERP investment and its role as a commodity or as a strategic investment. Then follows a discussion of an industry in which companies have invested enormous amounts of money on ERP. Finally, in spite of the growing dominance of ERP systems, there is still little empirical evidence on the type of benefits that companies get from an ERP implementation. Therefore, it is important to understand the effects of ERP in cross-functional systems.

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ERP Adoption

Enterprise Resource Planning ◽

10.4018/978-1-4666-4153-2.ch001 ◽

2013 ◽

pp. 1-9

Author(s):

Jorge A. Romero

Keyword(s):

Empirical Evidence ◽

Enterprise Resource Planning ◽

Resource Planning ◽

Integrated Approach ◽

Company Performance ◽

Erp Systems ◽

Erp Implementation ◽

Strategic Investment ◽

Functional Systems

Enterprise Resource Planning (ERP) has been a major investment for most companies since the early nineties. ERP is a type of investment that has an integrated approach, and has been widely adopted, but there is little empirical evidence about how ERP implementation affects company performance. This chapter begins with the discussion of ERP investment and its role as a commodity or as a strategic investment. Then follows a discussion of an industry in which companies have invested enormous amounts of money on ERP. Finally, in spite of the growing dominance of ERP systems, there is still little empirical evidence on the type of benefits that companies get from an ERP implementation. Therefore, it is important to understand the effects of ERP in cross-functional systems.

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Conclusions

Implementation Strategies for SAP R/3 in a Multinational Organization ◽

10.4018/978-1-59140-776-8.ch012 ◽

2011 ◽

pp. 313-335

Author(s):

Chetan Sankar ◽

Karl-Heinz Rau

Keyword(s):

Life Cycle ◽

Change Management ◽

Erp Systems ◽

Erp Implementation ◽

Business Environments ◽

Management Processes ◽

It Personnel ◽

Implementation Experience ◽

Future Business

• Summarize the SAP R/3 implementation experience of Robert Bosch GmbH and Robert Bosch US • Review the inventory of skills that you improved by analyzing the case study • Identify skills that IT personnel will need to possess in future business environments • List lessons in implementing ERP systems that could be applicable to your future career • Acquire an in-depth understanding of ERP implementation by analyzing the implementation of SAP R/3 systems at Robert Bosch RB GmbH during 1992-2004 • Analyze the change management processes adopted by Robert Bosch using the change management life cycle theories for the periods 1992-1999 and 2000-2004

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Tax avoidance in the Indonesian manufacturing industry

Journal of Contemporary Accounting ◽

10.20885/jca.vol3.iss1.art1 ◽

2021 ◽

Vol 3 (1) ◽

pp. 1-11

Author(s):

Ricardo Samuel Manihuruk ◽

Dianwicaksih Arieftiara ◽

Munasiron Miftah

Keyword(s):

Empirical Evidence ◽

Manufacturing Industry ◽

Audit Quality ◽

Stock Exchange ◽

Control Variable ◽

Tax Avoidance ◽

Capital Intensity ◽

Manufacturing Companies ◽

Fairness Principle ◽

Positive Effect

This study aims to determine tax avoidance in the Indonesian manufacturing industry. The control variable is the industrial sub-sector. In this study tax avoidance is proxied as book tax differences. This study focuses on manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2015-2018 period. Using the STATA 13 regression data panel, this study shows that capital intensity has no significant effect on tax avoidance and inventory intensity has no significant effect on tax avoidance. However, this study found that industry auditors' specialization had a positive effect on tax avoidance. This study contributes to enhancing empirical evidence of audit quality, proxied by industry auditors' specialization can provide assurance of managers' tax avoidance activities did not violate the fairness principle, thus increase tax avoidance activities.

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Analysis of Factors Affecting Internal Audit Quality: Study at the Inspectorate of Maluku Province, Ambon City and West Seram District

International Journal of Multicultural and Multireligious Understanding ◽

10.18415/ijmmu.v6i6.1247 ◽

2019 ◽

Vol 6 (6) ◽

pp. 116

Author(s):

Piter Arson Welay ◽

Rosidi Rosidi ◽

Nurkholis Nurkholis

Keyword(s):

Control System ◽

Internal Control ◽

Work Experience ◽

Audit Quality ◽

Internal Audit ◽

Audit Process ◽

Factors Affecting ◽

Audit Opinion ◽

Internal Control System ◽

Positive Effect

This study aims to empirically examine the effects of competence, independence, work experience and internal control systems. Using 61 samples of employees working as auditors in the Maluku Provincial Inspectorate, Ambon City and West Seram District, the data analysis method uses SEM-PLS with the help of the Warp PLS 6.0 application. The results showed that competency had no effect on audit quality, because respondents' demographics had competencies that were not in accordance with the standards, so that in the last few years they had received a fair audit opinion with an exception. Independence has a positive effect on audit quality, the auditor who is always objective in carrying out the audit process, will produce a quality audit. Work experience has a positive effect on audit quality, the more experienced the auditor, the easier it will be to detect audit problems. The internal control system is able to strengthen the relationship of competence, independence and job satisfaction with audit quality, this shows that a good internal control system will support the creation of quality audits.

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The Philosophy Of Tri Kaya Parisudha Towards Auditor Pressure Phenomenon Of Audit Procedure Stopping

International Journal of Environmental, Sustainability, and Social Science ◽

10.38142/ijesss.v2i2.74 ◽

2021 ◽

Vol 2 (2) ◽

pp. 71-78

Author(s):

Ni Putu Riski MARTINI ◽

I Ketut Puja Wirya SANJAYA

Keyword(s):

Audit Quality ◽

Time Pressure ◽

Sampling Technique ◽

Situational Factors ◽

Audit Process ◽

Public Accounting ◽

Accounting Firms ◽

Accounting Firm ◽

The Relationship ◽

Positive Effect

These cases of audit irregularities indicate a decrease in audit quality, which is caused by a dysfunctional audit behavior. This study discusses the factors that are thought to have an effect on premature termination of audit procedures, which can be caused by external factors related to situational factors during the audit process that will affect the behavior of auditors in conducting audits, namely time pressure and compliance pressure. In addition, the auditors' awareness and sensitivity in preventing or detecting fraud is influenced by the application of a noble local culture, which in Bali is known as the Tri Kaya Parisudha cultural concept. This research was conducted at a public accounting firm in Bali. The research time is 2021. The population of this research is 16 public accounting firms in Bali with 122 auditors. The sampling technique used in this research is purposive sampling technique. Based on the results of the analysis, it can be concluded that: time pressure and compliance pressure have a positive effect on premature audit procedures and the Tri Hita Karana philosophy is able to moderate the relationship between time pressure and adherence pressure on premature audit procedures.

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