The impact of information systems on financial audit: An over view of external auditors’ preparedness to tackle clients automated environment

As businesses become automated and paperless, external auditors need to embrace information systems to ensure effectiveness in auditing of companies. Research in this area is still limited, hence this study (1) explores the perception of external auditors regarding e-business complexity among their clients, and (2) how external auditors are prepared to tackle this changing environment. Audit partners/managers from 12 audit firms in Tanzania were interviewed. The findings revealed that the level of IS usage among audit clients is varied and clustered into three groups: low, moderate and advanced IS usage. Auditors perceived banks’ products embedded with telecom services (mobile banking) as the most complex and risky platform to audit. On technological preparedness, audit firms had installed ACL, IDEA, SAS, GAM-X, Teammate, Ethical hacking software and other audit tools depending on the nature and complexity of their clients. These findings form a basis to inform the audit authorities and shareholders on the level of IS adoption amongst external auditors and their clients’ level of automation. The study provides a groundwork for other studies to be conducted in developing countries where e-business is gaining its momentum.