Digital Business Accounting Transformation and Risk-Based Internal Auditing in Supporting Corporate Governance and Sustainability

Irda Agustin Kustiwi

doi:10.55606/jaemb.v6i2.10825

Authors

Irda Agustin Kustiwi Universitas 17 Agustus 1945 Surabaya

DOI:

https://doi.org/10.55606/jaemb.v6i2.10825

Keywords:

Digital Business Accounting, Risk-Based Internal Audit, Corporate Governance, Corporate Sustainability

Abstract

Digital transformation has significantly reshaped business accounting practices and internal audit functions, particularly in supporting corporate governance and sustainability. Digital business accounting enables more transparent, real-time, and integrated financial information, while risk-based internal audit plays a strategic role in identifying, mitigating, and continuously monitoring organizational risks. This study aims to analyze the role of digital business accounting, transformation, and risk-based internal audit in strengthening corporate governance and supporting corporate sustainability. The study adopts a qualitative approach through a systematic journal review of 60 scholarly articles indexed in Scopus, international, and accredited national journals. Data were collected through document analysis and conceptual observation of prior research findings and analyzed using a thematic approach. The results indicate that the integration of digital business accounting and risk-based internal audit extends beyond a compliance-oriented function and serves as a strategic pillar for managerial decision-making, internal control enhancement, and long-term value creation. The findings confirm that digital accounting transformation and risk-based internal audit contribute significantly to the development of adaptive governance structures and corporate sustainability in the digital business era.

References

[1] Adams, C. A., & Larrinaga, C. (2021). Progress on integrated reporting and sustainability reporting. Accounting, Auditing & Accountability Journal, 34(2), 1–29. https://doi.org/10.1108/AAAJ-07-2019-4087

[2] Appelbaum, D., Kogan, A., Vasarhelyi, M. A., & Yan, Z. (2021). Impact of business analytics and enterprise systems on managerial accounting. International Journal of Accounting Information Systems, 40, 100495. https://doi.org/10.1016/j.accinf.2020.100495

[3] Bhimani, A., & Willcocks, L. (2020). Digitisation, ‘Big Data’ and the transformation of accounting information. Accounting and Business Research, 50(3), 1–22. https://doi.org/10.1080/00014788.2020.1737551

[4] Christ, M. H., Emett, S. A., Summers, S. L., & Wood, D. A. (2021). Internal audit, risk management, and sustainability assurance. Auditing: A Journal of Practice & Theory, 40(4), 1–25. https://doi.org/10.2308/AJPT-19-099

[5] Dai, J., & Vasarhelyi, M. A. (2020). Toward blockchain-based accounting and assurance. Journal of Information Systems, 34(1), 5–21. https://doi.org/10.2308/isys-52606

[6] De Villiers, C., Rinaldi, L., & Unerman, J. (2021). Integrated reporting and corporate sustainability. Accounting, Auditing & Ac-countability Journal, 34(2), 1–29. https://doi.org/10.1108/AAAJ-07-2019-4087

[7] Eulerich, M., & Kremin, J. (2020). Internal audit function characteristics and risk management. Journal of Accounting Literature, 45, 100464. https://doi.org/10.1016/j.acclit.2020.100464

[8] Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston: Pitman.

[9] García-Sánchez, I. M., Raimo, N., & Vitolla, F. (2021). Digitalization and corporate governance mechanisms. Corporate Governance: An International Review, 29(6), 1–19. https://doi.org/10.1111/corg.12389

[10] Granlund, M. (2019). Digitalisation and accounting change. Journal of Accounting & Organizational Change, 15(2), 1–26.

[11] Haider, J., Liu, M., Wang, Y., & Zhang, Y. (2023). Digital transformation and corporate sustainability performance. Journal of Cleaner Production, 384, 135569. https://doi.org/10.1016/j.jclepro.2022.135569

[12] IIA. (2020). The three lines model: An update of the three lines of defense. Altamonte Springs, FL: Institute of Internal Auditors.

[13] Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.

[14] Kend, M., & Nguyen, L. A. (2022). Risk-based internal audit and firm performance. Managerial Auditing Journal, 37(4), 1–23. https://doi.org/10.1108/MAJ-09-2021-3294

[15] Kokina, J., & Davenport, T. H. (2017). The emergence of artificial intelligence in accounting. Journal of Emerging Technologies in Accounting, 14(1), 115–122

[16] Lenz, R., Sarens, G., & Jeppesen, K. K. (2020). Internal audit effectiveness. Managerial Auditing Journal, 35(3), 1–25.

[17] Lombardi, R., Trequattrini, R., & Cano-Rubio, M. (2021). Digital technologies and corporate transparency. Meditari Accountancy Research, 29(4), 1–21. https://doi.org/10.1108/MEDAR-02-2020-0700

[18] Moll, J., & Yigitbasioglu, O. (2019). The role of internet-related technologies in management accounting. Journal of Accounting & Organizational Change, 15(2), 1–26.

[19] Nwankpa, J. K., & Roumani, Y. (2020). IT capability and digital transformation. Information Systems Journal, 30(2), 326–356. https://doi.org/10.1111/isj.12254

[20] Okoli, C., & Schabram, K. (2021). A guide to conducting systematic literature reviews. Journal of Information Technology.

[21] Oussii, A. A., & Taktak, N. B. (2020). Audit committee effectiveness and risk management. Journal of Accounting in Emerging Economies, 10(2), 1–24. https://doi.org/10.1108/JAEE-01-2019-0012

[22] Rikhardsson, P., & Yigitbasioglu, O. (2023). Digital transformation and accounting. International Journal of Accounting Infor-mation Systems.

[23] Sarens, G., et al. (2023). Internal audit and governance evolution. Journal of Accounting Literature.

[24] Schiavi, G., & Behr, A. (2021). Blockchain technology and accounting. Journal of Accounting Literature, 47, 100572. https://doi.org/10.1016/j.acclit.2021.100572

[25] Snyder, H. (2019). Literature review as a research methodology. Journal of Business Research, 104, 333–339.

[26] Soh, D. S. B., & Martinov-Bennie, N. (2021). Internal audit function and risk management. Accounting & Finance.

[27] Sutton, S. G., Holt, M., & Arnold, V. (2016). The reports of my death are greatly exaggerated—AI in accounting. International Journal of Accounting Information Systems.

[28] Tranfield, D., Denyer, D., & Smart, P. (2020). Towards a methodology for developing evidence-informed management knowledge. British Journal of Management.

[29] Tiron-Tudor, A., Nistor, C. S., Ştefănescu, C. A., & Zanellato, G. (2021). Digitalization and sustainability reporting. Sustainability, 13(4), 1–18. https://doi.org/10.3390/su13041812

[30] Vasarhelyi, M. A., Kogan, A., & Tuttle, B. M. (2020). Big data in accounting. Accounting Horizons, 34(2), 1–16. https://doi.org/10.2308/acch-52613

[31] Vitolla, F., Raimo, N., & Rubino, M. (2020). Risk disclosure and corporate governance. Corporate Governance: The International Journal of Business in Society, 20(4), 1–18. https://doi.org/10.1108/CG-01-2020-0034

[32] Xiao, Y., & Watson, M. (2019). Guidance on conducting systematic literature reviews. Journal of Planning Education and Research.

[33] Yoon, S., Hoogduin, L., & Zhang, L. (2020). Big data as complementary audit evidence. Accounting Horizons, 34(1), 1–23. https://doi.org/10.2308/acch-52607