Knowledge management in auditing: A case study in Vietnam

Knowledge has become the most essential asset owed by auditing firms. Indeed, in the overall objectives of the conduct of an audit, the managing of knowledge and expertise becomes crucially important to professional auditing firms.Due to great challenges of new regulations and changes in accounting and auditing standards, it is critical to definetheoretical aspects of knowledge management (KM)in auditing. Although, research on auditing has appeared in the literature since the 1980s and brought many benefits to audit efficiency and effectiveness, these studies have mostly viewed auditing as information processes and hence couldnot explain how knowledge is created during an auditing process. Given the importance of knowledge and its management in auditing, and in order to address the research gap, this paper explores how knowledge is managed in an auditing firm through a case study in Vietnam. The methodology employed is asingle case approachusing twenty in-depth interviews, observations, and documentary analysis. Findings from empirical analysis of the case togetherwith the literature review provide useful insights to constructa theoretical model of KMprocess in auditing. The auditing process divides into three major phases: collecting, analyzing, and synthesizing. The Collecting involves collecting raw data or client's unanalyzed information by audit individuals. The Analyzing comprises audit procedures to analyze data and create appropriate sufficient audit evidence. The Synthesizing consists of the reviews of top-level auditors who are the partners and managers of the audit engagement to conclude the ultimate auditor reports. Our Collect-Analyze-Synthesize (CAS) model visualizes the auditing process as a spiral with many iterative CAS processes of various audit engagements through many years. The center of the model is wisdom to reflect its importance in the auditing process. In the CAS model, wisdom can be represented as a high level of intensive audit expertise andprofessional judgment, attained from a long-time experience thatis also enhanced and shared by the empirical implementation of CAS processes.