The Impact of Digital Transformation on the Internal Audit Quality and its Reflection on Enhancing the Quality of Financial Reporting " An Empirical Study"

Abstract

There have been many developments in the internal audit over time in terms of standards, organizational dependency, independence, the emergence of digital transformation and its relationship to improving the quality of internal auditing and its role in assessing risks and improving the quality of financial reporting. Internal audit is fundamental in maintaining transparency in the dissemination of information about a company’s financial position and performance. In this respect, the quality of internal audit is essential for improving the quality of financial reporting. Purpose–This study aims to examine the association between digital transformation, internal audit quality and its influence on financial reporting quality. The study hypothesis states that: - the first hypothesis there is no statistically significant relationship between the mechanisms of digital transformation and the quality of internal auditing; the second hypothesis: - there is no statistically significant relationship between the mechanisms of digital transformation and the quality of financial reporting. the third hypothesis: - There is no statistically significant relationship between the quality of internal auditing and the quality of financial reports in light of the digital transformation Design/methodology/approach–The methodology adopted was survey method to collect primary data using a structured questionnaire. A total of 112 copies of questionnaire were distributed with 79 answered correctly and fully retrieved. Data was analyzed using statistical package for social science (SPSS) was used to measure the influence of digital transformation on internal audit quality and its influence on the financial reporting quality at 95% confidence level. The study results and statistical show that digital transformation has positive relationship with internal audit quality and enhancing the quality of financial reporting. The Study recommended that the importance of publishing new regulations and law to govern using the digital transformation on internal audit to secure and protect users. The study also recommended that using digital transformation in all corporate activities for reducing the costs. Finally, the profession of audit should leverage their strategic ways and methods of work to be adapted for the new generation of technology otherwise they face a problem of how to justify their costs.