Effect of Risk-Based Audit and Information Technology on the Relationship between Client’s Risk Management and Audit Quality

Abstract

Background: Audit quality is pivotal for financial reporting integrity, yet the mechanisms linking client risk management (CRA) to audit outcomes remain underexplored. Understanding how risk-based audits (RBA), information technology applications (ITA), and auditor accountability influence this relationship is critical for enhancing audit practices.

Objective of the Study: This study examines the impact of CRA on audit quality, with RBA and ITA as parallel mediators and auditor accountability as a moderator.

Methodology: Data were collected from 170 auditors through a survey and analysed using structural equation modelling (SEM) with SmartPLS 4.0.9.2. Validity and reliability were rigorously tested, and the analysis assessed direct, mediating, and moderating relationships.

Results: CRA positively influences audit quality, mediated by RBA and ITA. Auditor accountability strengthens the relationship between CRA and audit quality. Still, it weakens the link between RBA and audit quality, suggesting that accountability pressures may shift auditors toward professional judgment over structured methods.

Unique Contribution: This study highlights the mediating roles of RBA and ITA and the dual moderating effects of accountability, offering practical insights for audit firms to balance accountability demands with technological and methodological advancements.

Conclusion: Effective CRA, supported by RBA and ITA, improves the audit quality. However, managing accountability pressures is crucial to ensure auditors effectively leverage structured methodologies and technologies. These findings contribute to both theory and practice in audit quality improvement.

Key Recommendation: Future research should examine the impact of emerging technologies (e.g., AI and machine learning) on audit quality and explore cross-cultural or regulatory variations in the study’s findings. Longitudinal studies are also suggested to evaluate the long-term effects of accountability pressures on audit practices.