Embracing a Paradoxical Environment to Promote Technological Advancements in Auditing: Perspectives from Auditors in the Field

Abstract

Despite the acknowledged power of audit innovations to significantly transform the auditing profession and the significant financial investments that organizations make in audit technologies, professionals are slow to incorporate these technologies fully. Through interviews with 27 internal and external auditors, we present a conceptual model that provides insights into why the auditing profession has been slow to adopt audit technologies. We interpret the interview responses through the lens of paradox theory and find that the auditing environment contains contradicting pressures for change (i.e., pressure to transform audit processes by incorporating audit technologies) and stability (i.e., pressure for audit processes to retain traditional practices). Paradox theory suggests that organizational actors' responses (e.g., embrace or deny) will be driven by how they interpret contradictory pressures. We find evidence that auditor participants demonstrated differential reactions to the stability vs. change paradox. Specifically, we find that when auditor participants use the ‘either/or’ assumption (i.e., responding to only one side of the contradiction) to interpret activities occurring in the auditing environment, they create unintended consequences by reinforcing traditional and outdated audit practices that do not promote change. When our participants use a ‘moderation’ assumption (i.e., fail to identify synergies between the competing demands) to interpret the environment, we find evidence consistent with such behavior inhibiting technological change—resulting in redundant audit tasks that could negatively affect audit quality.

Keywords: Paradox theory, digital transformation, qualitative field study