It’s all about audit quality: Perspectives on strategic-systems auditing

We discuss the antecedents of and rationale for what has become known as Strategic-Systems Auditing (SSA). We also describe the conceptual foundation and key elements of SSA. We observe that the auditor employing SSA conceives the audit as a process of evidence-driven, belief-based, risk assessment. We also illustrate facets of this process, including how the auditor, by acquiring a rich understanding of how and how well management is executing its business-model, develops rich (e.g., distributional) expectations of future financial-statement amounts and disclosures. These expectations form a benchmark against which the auditor later compares and investigates management’s asserted financial-statement amounts and disclosures. Finally, we pose and respond to some of the more common questions about elements of SSA and complete the paper by suggesting some educational innovations and high-value targets for research.One salient message is that SSA first emerged in the 1990s as an attempt to enhance audit quality in response to changes in the audit environment. Another salient message is that SSA continues to equilibrate, adapting to more recent environmental changes, especially society’s demand for greater protection from financial-statement fraud. Such adaptation requires ongoing, significant intellectual investments by audit practitioners and audit scholars/educators.