Article Sidebar

Download
Full text PDF
Statistic
Read Counter : 210 Download : 96

Downloads

Download data is not yet available.

Main Article Content

Abstract

This study explores the relationship between IT governance and audit outcomes, including audit costs, quality, report lag, opinions, and the readability of financial statement footnotes in Indonesian public companies. Utilizing regression analysis, the research finds that while IT governance does not significantly affect audit costs, report lag, or opinions, it positively influences audit quality. Contrary to expectations, higher IT capabilities do not lead to increased audit costs but reduce them by lowering audit efforts. Furthermore, IT governance does not notably impact footnote readability, potentially due to information overload in annual reports. These findings shed light on the importance of IT governance in shaping audit quality and provide valuable insights for stakeholders in Indonesian public companies. Further research is encouraged to explore these relationships in different contexts and industries.

Keywords

IT governance everyone's IT phenomena audit outcomes footnote readability

Article Details

License

Copyright (c) 2024 Jurnal Akuntansi dan Auditing Indonesia

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).

References

  1. Abernathy, J. L., Guo, F., Kubick, T. R., & Masli, A. (2018). Financial statement footnote readability and corporate audit outcomes. Auditing: A Journal of Practice and Theory.
  2. Anthony Jr, B. (2018). Using green it governance as a catalyst to improve sustainable practices adoption: a contingency theory perspective. International Journal of Business Continuity and Risk Management, 8(2), 124-157.
  3. Antle, R., & Nalebuff, B. (1991). Conservatism and auditor-client negotiations. Journal of Accounting Research, 29, 31-54. https://doi.org/10.2307/2491002
  4. Askary, S., Goodwin, D., & Lanis, R. (2012). Improvements in audit risks related to information technology frauds. International Journal of Enterprise Information Systems (IJEIS), 8(2), 52-63. doi: 10.4018/jeis.2012040104
  5. Batyashe, T. N., & Iyamu, T. (2017). Examining it governance through diffusion of innovations: a case of a South African telecom. Information Resources Management Journal (IRMJ), 30(3), 26-40. doi: 10.4018/IRMJ.2017070102
  6. Becker, C. L., DeFond, M. L., Jiambalvo, J., & Subramanyam, K. (1998). The effect of audit quality on earnings management. Contemporary Accounting Research, 15(1), 1-24. doi: 10.1111/j.1911-3846.1998.tb00547.x
  7. Benaroch, M., & Chernobai, A. (2017). Operational it failures, it value-destruction, and board-level it governance changes. MIS Quarterly, Forthcoming. doi: 10.25300/MISQ/2017/41.3.04
  8. Bierstaker, J. L., Burnaby, P., & Thibodeau, J. (2001). The impact of information technology on the audit process: an assessment of the state of the art and implications for the future. Managerial Auditing Journal, 16(3), 159-164. doi: 10.1108/02686900110385489
  9. Board, F. A. S. (1980). Statement of financial accounting concepts No. 2: qualitative characteristics of accounting information. Financ Acc Stand Board.
  10. Courtis, J. K. (1995). Readability of annual reports: Western versus Asian evidence. Accounting, Auditing & Accountability Journal, 8(2), 4-17. doi: 10.1108/09513579510086795
  11. De Franco, G., Wong, M. F., & Zhou, Y. (2011). Accounting adjustments and the valuation of financial statement note information in 10-K filings. The Accounting Review, 86(5), 1577-1604. doi: 10.2139/ssrn.1569644
  12. De Haes, S., & Van Grembergen, W. (2008). Analysing the relationship between it governance and business/it alignment maturity. Paper presented at the Proceedings of the 41st Annual Hawaii International Conference on System Sciences (HICSS 2008).doi: 10.1109/HICSS.2008.66
  13. Financial Accounting Standards Board (FASB). 2014. Notes to financial statements. exposure draft. Chapter 8. Norwalk, CT: FASB.
  14. Felix Jr, W. L., & Kinney Jr, W. R. (1982). Research in the auditor's opinion formulation process: state of the art. Accounting review, 245-271.
  15. Francis, J. R., & Krishnan, J. (1999). Accounting accruals and auditor reporting conservatism. Contemporary Accounting Research, 16(1), 135-165. https://doi.org/10.1111/j.1911-3846.1999.tb00577.x
  16. Francis, T. (2014). To be clear, sec reviewers want filings in plain English, period. Wall Street Journal.
  17. Givoly, D., & Palmon, D. (1982). Timeliness of annual earnings announcements: some empirical evidence. Accounting review, 486-508. Retrieved from https://www.jstor.org/stable/i302500
  18. Gregory, R. W., Kaganer, E., Henfridsson, O., & Ruch, T. J. (2018). IT Consumerization and the transformation of it governance. Mis Quarterly, 42(4), 1225-1253. doi: 10.25300/MISQ/2018/13703
  19. Habib, A., & Bhuiyan, M. B. U. (2018). Overlapping membership on audit and compensation committees, equity holdings of overlapping members and audit outcomes. Accounting Research Journal, 31(4), 509-530. doi: 10.1108/ARJ-09-2015-0116
  20. Havelka, D., & Merhout, J. W. (2013). Internal information technology audit process quality: theory development using structured group processes. International Journal of Accounting Information Systems, 14(3), 165-192. doi:https://doi.org/10.1016/j.accinf.2012.12.001
  21. Henderson, J. C., & Venkatraman, H. (1999). Strategic alignment: leveraging information technology for transforming organizations. IBM systems journal, 38(2.3), 472-484. Retrieved from https://ieeexplore.ieee.org/document/5387398
  22. Hoffman, B. W., Sellers, R. D., & Skomra, J. (2018). The impact of client information technology capability on audit pricing. International Journal of Accounting Information Systems, 29, 59-75. doi: 10.1016/j.accinf.2018.03.002
  23. Iliescu, F. M. (2010). Auditing IT governance. Informatica Economica, 14(1), 93.
  24. IT Governance Institute [ITGI]. (2003). Board briefing on it governance. IT Governance Institute, 2nd Edition. Retrieved from http://www.itgi.org
  25. Jacobson, D. D. (2009). Revisiting IT governance in the light of institutional theory. Paper presented at the 2009 42nd Hawaii International Conference on System Sciences. doi: 10.1109/HICSS.2009.374
  26. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. doi: 10.1002/9780470752135.ch17
  27. Johnstone, K. M., & Bedard, J. C. (2003). Risk management in client acceptance decisions. The Accounting Review, 78(4), 1003-1025. doi: 10.2308/accr.2003.78.4.1003
  28. Jones, M. J., & Shoemaker, P. A. (1994). Accounting narratives: A review of empirical studies of content and readability. Journal of accounting literature, 13, 142.
  29. Joshi, A., Bollen, L., Hassink, H., De Haes, S., & Van Grembergen, W. (2018). Explaining IT governance disclosure through the constructs of it governance maturity and IT strategic role. Information & Management, 55(3), 368-380.doi: 10.1016/j.im.2017.09.003
  30. Karim, M. A., & Sarkar, S. (2019). Auditors' quality, footnotes, and earnings persistence. Managerial Finance. doi: 10.1108/MF-11-2018-0569
  31. Lai, K.-W. (2019). Audit report lag, audit fees, and audit quality following an audit firm merger: Evidence from Hong Kong. Journal of International Accounting, Auditing and Taxation, 100271. doi: 10.1016/j.intaccaudtax.2019.100271
  32. Lai, M., Basiruddin, R., & Menshawy, I. M. (2022). A Review of Board level it governance: a taxonomy to inform the quality of financial reports.
  33. Lee, T. A., & Tweedie, D. (1975). Accounting information: an investigation of private shareholder usage. Accounting and Business Research, 5(20), 280-291.
  34. Leliveld, I., & Jeffrey, M. (2004). Best practices in it portfolio management. MIT Sloan Management Review.
  35. Lehavy, R., Li, F., & Merkley, K. (2011). The effect of annual report readability on analyst following and the properties of their earnings forecasts. The Accounting Review, 86(3), 1087-1115. doi: 10.2308/accr.00000043
  36. Li, F. (2008). Annual report readability, current earnings, and earnings persistence. Journal of Accounting and economics, 45(2-3), 221-247. doi: 10.1016/j.jacceco.2008.02.003
  37. Lowe, D. J., Bierstaker, J. L., Janvrin, D. J., & Jenkins, J. G. (2017). Information technology in an audit context: have the big 4 lost their advantage? Journal of Information Systems, 32(1), 87-107.
  38. doi: 10.2308/isys-51794
  39. Lunardi, G. L., Becker, J. L., Maçada, A. C. G., & Dolci, P. C. (2014). The impact of adopting it governance on financial performance: an empirical analysis among Brazilian firms. International Journal of Accounting Information Systems, 15(1), 66-81. doi: 10.1016/j.accinf.2013.02.001
  40. Maizlish, B., & Handler, R. (2005). IT (information technology) portfolio management step-by-step: Unlocking the business value of technology: John Wiley & Sons.
  41. Marchand, D. A. (2005). Reaping the business value of IT. Business & Economic Review, 51(4), 21-24.
  42. Mata, F. J., Fuerst, W. L., & Barney, J. B. (1995). Information technology and sustained competitive advantage: a resource-based analysis. Mis Quarterly, 487-505. doi: 10.2307/25148626
  43. Mazza, T., & Azzali, S. (2018). Information technology controls quality and audit fees: evidence from Italy. Journal of Accounting, Auditing & Finance, 33(1), 123-146. doi: 10.1177/0148558X15625582
  44. Newton, J. D., & Ashton, R. H. (1989). The association between audit technology and audit delay. Auditing-a Journal of Practice & Theory, 8, 22-37.
  45. Peterson, R. R. (2004). Integration strategies and tactics for information technology governance Strategies for information technology governance (pp. 37-80): Igi Global. Retrieved from https://www.researchgate.net/profile/Reima-Suomi/publication/314501133_Governance_Structures_for_IT_in_the_Health_Care_Industry/links/5519414a0cf2d241f355f085/Governance-Structures-for-IT-in-the-Health-Care-Industry.pdf
  46. Prasad, A., Green, P., & Heales, J. (2012). On it governance structures and their effectiveness in collaborative organizational structures. International Journal of Accounting Information Systems, 13(3), 199-220. Retrieved from https://www.researchgate.net/publication/220890025_IT_Governance_in_Collaborative_Organizational_Structures
  47. Rubino, M., Vitolla, F., & Garzoni, A. (2017). The impact of an it governance framework on the internal control environment. Records Management Journal, 27(1), 19-41. doi: 10.1108/RMJ-03-2016-0007
  48. Sambamurthy, V., & Zmud, R. W. (2000). Research commentary: The organizing logic for an enterprise's it activities in the digital era—a prognosis of practice and a call for research. Information systems research, 11(2), 105-114. doi: 10.1287/isre.11.2.105.11780
  49. Schwarz, A., & Hirschheim, R. (2003). An extended platform logic perspective of it governance: managing perceptions and activities of it. The journal of strategic information systems, 12(2), 129-166. doi: 10.1016/S0963-8687(03)00021-0
  50. Fung, S. Y. K., Raman, K., & Zhu, X. K. (2017). Does the PCAOB international inspection program improve audit quality for non-US-listed foreign clients? Journal of Accounting and economics, 64(1), 15-36. doi: 10.1016/j.jacceco.2017.04.002
  51. Tallon, P. P., Ramirez, R. V., & Short, J. E. (2013). The information artifact in it governance: toward a theory of information governance. Journal of Management Information Systems, 30(3), 141-178. doi: 10.2753/MIS0742-1222300306
  52. Van Grembergen, W. (2004). Strategies for information technology governance: Igi Global. doi: 10.4018/978-1-59140-140-7
  53. Van Grembergen, W., & De Haes, S. (2009). Enterprise governance of information technology: achieving strategic alignment and value. New York: Springer. doi: 10.1007/978-3-030-25918-1_1
  54. Veerankutty, F., Ramayah, T., & Ali, N. A. (2018). Information technology governance on audit technology performance among Malaysian public sector auditors. Social Sciences, 7(8), 124. doi: 10.15405/epfe.23081.1
  55. Weill, P., & Vitale, M. (2002). What it infrastructure capabilities are needed to implement e-business models? Mis Quarterly, 1(1), 17. Retrieved from https://www.researchgate.net/publication/220500707_What_IT_Infrastructure_Capabilities_are_Needed_to_Implement_E-Business_Models
  56. Willson, P., & Pollard, C. (2009). Exploring it governance in theory and practice in a large multi-national organisation in Australia. Information Systems Management, 26(2), 98-109. doi: 10.1080/10580530902794760
  57. Xue, L., Ray, G., & Gu, B. (2011). Environmental uncertainty and it infrastructure governance: a curvilinear relationship. Information systems research, 22(2), 389-399.doi: 10.2139/ssrn.1593115
  58. Xue, Y., Liang, H., & Boulton, W. R. (2008). Information technology governance in information technology investment decision processes: the impact of investment characteristics, external environment, and internal context. Mis Quarterly, 67-96. doi: 10.2307/25148829
  59. You, H., & Zhang, X.-j. (2009). Financial reporting complexity and investor underreaction to 10-k information. Review of Accounting studies, 14(4), 559-586. doi: 10.2139/ssrn.985365
  60. Zhang, J. H. (2018). Accounting comparability, audit effort, and audit outcomes. Contemporary Accounting Research, 35(1), 245-276. doi: 10.1111/1911-3846.12381