Audit innovation learning, audit performance and audit reputation of CPAs in Thailand.

• Author: Hongsombud, Ar-porn
• Position: Report - Survey

1. INTRODUCTION

   Recently, more complex and technological advancement of organization has largely changed making competition and economic growth. The increase and complexity of global business competition is emphasized on the need for innovation, flexible, and responsive solutions to emerging (Birkinshaw and Hood, 1999; Hitt et al., 1998). However, such changes might cause the auditors to perceive knowledge and ability over existing foundation. These auditors have both high knowledge and ability to increase performance, because of the influence to audit performance. In some cases, the auditors need to change audit procedure to be consistent with current situation. In addition, at current is learning era and knowledge related to professional skills alone are not sufficient and the successful it is essential that require creativity of learning solutions for the new functionality. To lead changes that result in increased audit effectiveness, therefore auditors need learning into guidelines for more new audit. Jung et al., (2003); Tierney et al., (1999) stated that people who need more creativity and innovation will be able to survive, to compete, to grow, and to lead to success especially by technologically driven.

   The innovation learning is important for the auditors. This is a challenge for any changes in business environment. Underlying every innovation process is the need for innovation ability, competitive advantage and the ability to handle the innovation, skills, training and knowledge (Hallgren, 2009). It is an ability to use their knowledge, idea and practices that have never been before used or the development from existing adoption (Lang, 2000). Furthermore, Rogers (1995) stated that an innovation is "an idea, practice, or object perceived as new by an individual or other unit of adoptions". In terms of innovation, learning is important in performing auditing. Thus, it becomes significant in framework of innovation learning through the review and analysis of adding understanding of innovation learning. In the context of audit, audit practice is encouraged to create a new concept, audit creativity, audit flexibility and combination of various methods of audit innovation learning. This results in added value and success in audit tasks to efficiency and effectiveness. Consistent with Van der and Elfring (2002) who stated that the processes of innovation are critical to achieving operational efficiency as well as to raising service quality.

   More recently, the AICPA has issued SAS No. 99 (AICPA, 2002) which mandates that auditors be assigned to "importance of audit responsibilities that should possess the knowledge, skill, and ability" to effectively complete those tasks. Therefore, knowledge and ability of an auditor will help increase confidence in the audit performance. In addition, audit performance of the auditors is related to the stakeholders. It is necessary for the auditor needs to have much knowledge and ability to gain acceptance from stakeholder because the people help analyze the results from audit and presentation of audit reports.

   Accordingly, the relationships among audit innovation learning, audit performance and audit reputation are examined. To clearly verify the aforementioned relationships, information of CPAs in Thailand, auditors are the sample of the study. Audit innovation learning includes audit idea generation, creative audit thinking, flexible audit practice and integrative audit technique knowledge. Interestingly, audit innovation learning is hypothesized to become a key determinant of driving and explaining audit reputation via mediating effects of audit performance and via moderating of professional experience and stakeholder relationship. Hence, the primary objective of this study is to investigate the influences of audit innovation learning on audit reputation through audit performance as mediators, and to investigate the influences of audit innovation learning on audit performance and audit reputation through professional experience and stakeholder relationship as moderating effect of information CPAs in Thailand. In this study, the key research questions are: (1) How does each dimension of audit innovation learning enhance audit performance and audit reputation?, (2) How does audit performance increase audit reputation?, (3) How does professional experience moderate the relationships among dimensions of audit innovation learning, audit performance and audit reputation?, and (4) How does stakeholder relationship moderate relationships among dimensions of audit innovation learning, audit performance and audit reputation?.

   This study is outlined as follows. The first section reviews existing significant literature in the areas and streams of audit innovation learning, audit performance, audit reputation, professional experience and stakeholder relationship, links between the concepts of the aforementioned variables, and develops the key research hypotheses of those relationships. The second explicitly details research methods, including data collection, measurements, and statistics. The third gives the results of the analysis and the corresponding discussion. The final summarizes the findings of the study, points out both theoretical and managerial contributions, and presents suggestions for further research and the limitations of the study.

2. AUDIT INNOVATION LEARNING AND AUDIT REPUTATION

   In this study, audit innovation learning the knowledge of an auditor is based on new ideas in auditing process, or auditing services for client by way of a new approach and the process of finding both new ideas and knowledge. The development of adapted tests for existing to more modern works, including how to guide to resolve the problems by using the flexibility of innovative solutions for current and future problems of auditing work. Accordingly, Alegre and Chiva (2008) defined that innovation learning is generation, acceptance, and implementation of new ideas, processes or service. In addition, Zaltmen et al., (1973) and Rogers (1971) propose that it is ideas, practices, or perception of the new invention by relating to the adoption. However, Chiesa (1969) suggests that review of innovation will include the ability in the areas of audit and audit performance as well as the integration of all related activities or processes or characteristics associated with innovation and success.

   In addition, to clearly understand the relationships among audit innovation learning, audit performance and audit reputation, and their moderators, we implemented cognitive theory to explain these relationships. Cognitive theory focuses on understanding and prediction of events. The perception might as well discovery and decision making and also relies on past events, current environment and future expectations. Teo et al., (2003); Venkatesh et al., (2003) stated that cognition theory is theoretical background of usefulness perceptions, external motivation, job fit, relative advantage and outcome expectations. In particular, cognitive theory is the style form of ideas of individual's preferred method of problem solving and communication and exchange ideas (Fuller and Kaplan, 2004).This is both process and outcome of behavioral changes that result from experience of each person which may be an incidental learning or learning intentions. Moreover, Baron and Henry (2006) stated that prior experience improves performance. Furthermore, Wong and Cheung (2008) suggest that audit innovation learning is the best way to identify fraud and helps to understand the auditor's performance. In this research, the cognitive theory has been applied to describe the relationships among audit innovation learning, audit performance and audit reputation of CPAs in Thailand. Thus, the conceptual, linkage, and research model presents the associations between audit innovation learning and audit reputation as shown in Figure 1.

   [FIGURE 1 OMITTED]

   2.1 Audit Idea Generation

   Audit idea generation refers to the process of new idea generated for audit innovation learning. An auditor is able to evolve and present new idea to the way different from the original one and can value generation of the auditing (Hurt and Teigen, 1977). Accordingly, Amabile (1983); Mumford (2001); Mumford and Connelly (1991); Reiter and llies (2004) suggest that innovation is a process of creativity audit that can be useful in audit practices as well as ideas and processes of alternative idea in audit performance. However, the generation of novel and appropriate ideas, products, processes, or solutions are useful or appropriate to the situation (Oldham and Cummings, 1996). In addition, the idea generation is competitive capabilities that can lead to performance (Ipe, 2003). As a consequence, if helps add value and increase the opportunities for success and reputation. Therefore, audit reputation is often associated with achievement, consistent with high performance (Ranft et al., 2006). Thus, the audit idea generation tends to gain greater audit performance and audit reputation. Thus, the hypotheses are proposed as follows:

   Hypothesis 1a: Audit idea generation will be positively related to audit performance.

   Hypothesis 2a: Audit idea generation will be positively related to audit reputation.

   2.2 Creative Audit Thinking

   Creative audit thinking is defined as the thinking in terms of creative audit, which the nature of ability to process diversity can lead to apply audit principle through their thinking skills to solve problems effectively which leads to audit creativity thinking. Accordingly, Amabile et al., (1996) propose that creativity is an ability to produce or is thought to be helpful and innovative. The creativity to synthesize and adapt the concept creates innovation in the successful implementation (Heap, 1989). Similarly, Gurteen (1988) suggests that creativity is about innovation artifice of performance. Thus, creativity audit thinking is an...