Audit in the digital age: the strategic role of auditor IT expertise in achieving internal control success in Chinese firms

Purpose This study investigates the role of auditor IT expertise in achieving internal control objectives within Chinese firms. By leveraging resource dependence theory, it examines how auditor IT expertise enhances the functionality and reliability of internal controls and explores the moderating effects of financial constraints. Design/methodology/approach The research utilizes a dataset of 22,441 firm-year observations from 2013 to 2021, covering Chinese non-financial firms listed on the Shanghai and Shenzhen Stock Exchanges. A multivariate regression framework is employed to test the hypothesized relationships, with robustness checks using alternative measures and addressing endogeneity concerns. Findings Auditor IT expertise significantly improves the achievement of internal control objectives, particularly in areas such as operational efficiency, reliable reporting, and compliance. The effect is more pronounced in financially constrained firms and non-State-Owned Enterprises (non-SOEs). Additional analyses reveal that auditor IT expertise plays a critical role in addressing severe internal control weaknesses and enhancing the quality of internal control systems. Practical implications The findings emphasize the strategic importance of engaging IT-proficient auditors to enhance corporate governance, especially for firms facing financial constraints. Audit firms are encouraged to invest in IT training to improve service quality, while policymakers should consider incentives for integrating IT expertise into audit practices. Originality/value This study contributes to the literature by integrating resource dependence theory into the underexplored domain of auditor IT expertise, providing new insights into its critical role in achieving internal control objectives. Unlike prior research that primarily focuses on traditional auditor competencies, this study highlights how IT expertise not only enhances internal control effectiveness but also serves as a strategic resource for firms navigating complex technological and financial environments. By focusing on Chinese firms – a rapidly evolving regulatory and technological context – it offers a globally relevant perspective on the interplay between IT, auditing, and corporate governance, paving the way for future research and practical advancements in audit quality and sustainability.