Business Process Complexity, System Complexity and Perceived Audit Quality: An ERP System Perspective

The turbulent events of the global financial crises have highlighted the importance of audit quality. Auditing in today’s business environment involves navigating through organizational information technology (IT) landscape dominated by ERP systems. Organizations depend on ERP systems for financial reporting which involve dealing with statutory and regulatory provisions. ERP systems thus, have become an integral part of compliance strategy due to their support for internal controls. ERP systems are associated with inherent system and business process complexities capable of carving new auditing landscape for auditors. However, the implications of such ERP-induced process changes and system complexities on audit quality have not been well understood and investigated. This study attempts to bridge this gap. The primary goal of this research is to frame business process complexity, system complexity and audit process as key predictors of audit quality as perceived by external auditors. Using empirical evidence gathered from auditors experienced in post-ERP audit, the research found that auditors’ post-ERP perception in an audit due to ERP implementation influenced the perceived audit quality. Specifically, system complexity, audit process changes and control risk were significant determinants of perceived audit quality. In addition, the findings reveal business process complexity and system complexity as key antecedents of control risk in an ERP audit. Joseph Nwankpa The University of Texas Pan American, USA Yaman Roumani Eastern Michigan University, USA DOI: 10.4018/978-1-4666-4860-9.ch010