Driving and Inhibiting Factors for Implementing Audit Analytics in an Internal Audit Function M. Gilang Ramadhan Marijn Janssen Haiko van der Voort Delft University of Technology ABSTRACT: Internal audit function (IAF) effectiveness can be improved by embracing Audit Analytics (AA). However, despite its promises, AA implementation remains limited. Although there is research on AA implementation in general, there needs to be an overview of insight into inhibiting and driving factors for internal auditing. This paper examines those driving and inhibiting factors by exploring the literature on AA implementation. The initial search revealed 98 uniquely identified papers. Further filtering and the additional search returned 42 articles, which were analyzed in detail. The analysis resulted in 12 driving and 23 inhibiting factors, grouped into internal, regulation, data, infrastructure, and audit practice categories. The literature shows that IAF encounters multiple and intertwined factors in AA implementation and needs to anticipate those factors. Moreover, AA implementation affects IAF’s parts and stakeholders differently, requiring internal and external collaboration. Building on these insights, we provide recommendations for further research. JEL Classifications: M42; M49; O32. Keywords: audit analytics; driving factors; inhibiting factors; internal audit. I. INTRODUCTION A udit analytics (AA) encompasses various forms of technology-based audits, from continuous auditing (CA) and some of its derivations like Multidimensional Audit Data Selection (MADS), to the advanced use of machine learning for fraud detection (Stippich and Preber 2016; Eulerich and Kalinichenko 2018). For this paper, we define AA as the process of identifying, gathering, validating, analyzing, and interpreting digital data using information and communication technology to further the purpose and mission of internal auditing. This definition is adopted from Lambrechts, Lourens, Millar, and Sparks (2011, 2) and Dai, Byrnes, Liu, and Vasarhelyi (2019, 7), with a slight modifi- cation to focus on the use of digital data and information technology for internal audit purposes. The most distinct char- acteristic is its ability to provide proactive and ongoing assurance. In proactive assurance, internal audit function (IAF) assists an organization in anticipating future risks and opportunities, such as through predictive analytics (Huibers 2013; Stippich and Preber 2016). Ongoing assurance can be achieved through the use of CA. AA also enables IAF to expand its service coverage (such as in operational and fraud areas), test larger samples, or even complete population data (Ames et al. 2015; Barr-Pulliam, Brown-Liburd, and Sanderson 2022). AA also allows auditors to perform audits remotely (Teeter, Alles, and Vasarhelyi 2010), which improves its advantage in the post-pandemic era. In this way, AA We are grateful to editors and anonymous reviewers for their insightful remarks and suggestions, which greatly improved our paper. Their contribu- tions are highly appreciated and have been invaluable in ensuring our work meets the highest standard. This paper is supported by the Indonesia Endowment Fund for Education (LPDP) through a doctoral scholarship for M. Gilang Ramadhan. The Indonesia Endowment Fund for Education had no involvement in the design and execution of this paper. M. Gilang Ramadhan and Marijn Janssen, Delft University of Technology, Faculty of Technology, Policy, and Management, Department of Engineering, Systems, and Services, Delft, The Netherlands; Haiko van der Voort, Delft University of Technology, Faculty of Technology, Policy, and Management, Department of Multi-Actor Systems, Delft, The Netherlands. Editor’s note: Accepted by Deniz A. Appelbaum, under the Senior Editorship of Hui Du. Submitted: July 2022 Accepted: June 2023 Early Access: July 2023 1 JOURNAL OF EMERGING TECHNOLOGIES IN ACCOUNTING Vol. 20, No. 2 Fall 2023 pp. 1–29 American Accounting Association DOI: 10.2308/JETA-2022-035 Downloaded from http://publications.aaahq.org/jeta/article-pdf/doi/10.2308/JETA-2022-035/96543/jeta-2022-035.pdf by guest on 03 August 2023