The Effect of Applying Analytical Procedures on Understanding Business Environment in Light of Using Accounting Information Systems in Auditing

Abstract

Since the entire world is moving with a steady acceleration to invest the technology in various fields and professions, exploring the effectiveness of these technologies in achieving the desired goals became an imperative need. Accordingly, the strengths and weaknesses that surround these systems could be identified. In this vein, the current study aimed to explore the effect of using client's accounting information systems by auditors on the effectiveness of analytical procedures in understanding business environment of entities, assessing the going concern of entities, and estimating potential misstatements in financial reports. To carry out the current study quantitative approach was adopted. Thus, a survey questionnaire was designed and distributed to 164 qualified and unqualified person who work in auditing profession in Jordan. In order to test hypotheses, a multivariate regression analysis tests were performed. The results showed that using client's accounting information systems by auditors has a significant positive effect on the relationship between analytical procedures and understanding business environment of entities, and estimating potential misstatements in financial reports. Conversely, the results showed that using client's accounting information systems by auditors has a significant negative effect on the relationship between analytical procedures and assessing the going concern of entities. The results imply that, auditors should benefit from using clients' accounting information systems in enhancing their understanding of business environment and estimating potential misstatements in financial reports. On the other hand, they should not depend extensively on these systems in assessing the going concern of these entities.