Do Auditors Adjust Their Audit Plans Accordingly When They Encounter Material Automated Control Weaknesses?

Automated control weaknesses are associated with defects in computer hardware or computer applications. AU 319 does not require auditors to add professionals with specialized skills in automated controls (or IT audit specialists) to the audit engagement. Auditors may encounter a material automated control weakness and adjust their audit plan without the assistance of an IT audit specialists. Thus, auditors may not adjust their audit plan enough to gain an understanding of the material automated control weakness. This is an important problem for auditors because this problem may result in misstated financial statements and incorrect internal control opinions if auditors fail to effectively examine automated control weaknesses. I conduct an experiment where Big Four auditors and IT audit specialists make audit planning adjustments. Results suggest that auditors’ audit plan adjustments are influenced by non-diagnostic evidence. Results also suggest auditors do not adjust their audit plans for material automated control weaknesses as they much as they do for material manual process evidence. Finally, auditors do not adjust their audit plans for automated control weaknesses as much as IT audit specialists’ adjust their audit plans for automated control weaknesses.