Sustainability, Vol. 18, Pages 623: Crafting Resilient Audits: Does Distributed Digital Technology Influence Auditor Behavior in the Age of Digital Transformation?

Sustainability doi: 10.3390/su18020623

Authors:
Hai-Xia Li
Shenghui Ma
Xin Gao
Ting Wang
Yanan Li

A key component of creating robust and sustainable businesses is the digital transformation of business operations. This study examines the impact of distributed digital technology, namely cloud computing and blockchain technology, on an auditor’s behavior, an essential component of the framework for corporate responsibility. This study also highlights the impact of digital transformation on sustainable auditing, urging auditors to improve their technological skills to build trust in evolving entities. We used a unique dataset of Chinese A-share listed companies from 2013 to 2021 to show that this time period is important because it shows the beginning and growth of these technologies in the Chinese business world. This gives us a good starting point for looking at their early-stage audit effects. Our key findings are threefold. First, we found that firms using distributed digital technologies (cloud computing and blockchain) experienced (a) higher audit fees and (b) standard audit opinions, indicating the growing complexity and the requirement that auditors acquire specialized skills in order to evaluate cyber-resilience and technological structures. Second, firms facing substantial profit fluctuations (higher risk level) following digital engagement were subject to higher audit fees and a decreased probability of standard audit outcomes, emphasizing the nuanced risks of digital transformation. Third, the main results were more pronounced in (a) non-state-owned enterprises and (b) high-tech enterprises. Our study is robust to multiple sensitivity analyses, endogeneity tests, and propensity score matching (PSM). The results show that regulators need to create and support specialized auditing regulations regarding distributed technologies. These regulations would assist auditors in evaluating cloud and blockchain engagement and make it clear to businesses what is important to be compliant.

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Hai-Xia Li www.mdpi.com