Abstract
This paper re-examines the historical development of Business Risk Auditing (BRA), its impact on international audit standard setting and the implications regarding the potential scope for, and conditions most likely to nurture, innovation and advancement in auditing practice. BRA was an audit methodology development promoted by a number of the large international audit firms in the late 1990s as a significant innovation but which, ultimately, did not have the promised, radical impact on audit practice. While previous studies have connected the retreat from BRA with the critical attention placed on auditing following major corporate scandals such as Enron, our analysis reveals that the most innovative elements of BRA, including the possibilities of establishing a more flexible, broader scope audit, were effectively dropped at an earlier stage and well before the formal contemplation by international standard setters of new audit risk standards. The BRA experience demonstrates that the capacity for innovative ideas to have a generalized influence on practice is highly dependent on the interactions between a shifting mix of professional and regulatory interests and preferences. In particular, lasting innovation requires a willingness and commitment both to develop the scope of the audit and to accept variations in aspects of the execution of the audit. This will not happen if standardization per se is seen as a necessary validation for successful innovation.
Original language | English |
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Pages (from-to) | 75-98 |
Journal | Auditing |
Volume | 35 |
Issue number | 3 |
DOIs | |
Publication status | Published - 1 Apr 2016 |