ISA 315 Compliance, Artificial Intelligence Adoption, and Audit Outcomes: A Theoretical Framework for Emerging Economies

Nadeen Azad Mohammed; Ahmad Haruna Abubakar

doi:10.47405/mjssh.v11i9.4210

Nadeen Azad Mohammed Faculty of Business Management and Professional Studies (FBMP), Management and Science University (MSU), Shah Alam, Selangor, Malaysia
Ahmad Haruna Abubakar Faculty of Business Management and Professional Studies (FBMP), Management and Science University (MSU), Shah Alam, Selangor, Malaysia

DOI: https://doi.org/10.47405/mjssh.v11i9.4210

Keywords: ISA 315, Artificial Intelligence, Audit Efficiency, Audit Effectiveness, Emerging Economies, Barriers and Facilitators

Abstract

The modern auditing environment is undergoing a radical change due to the accelerated technological development and the growing complexity of international business conditions (Munoko et al., 2020; Assidi et al., 2025). Risk assessment is the most important feature of the profession of auditing, formally regulated under the International Standard on Auditing (ISA) 315, Identifying and Assessing the Risks of Material Misstatement (Carlin & Persellin, 2021). The new ISA 315, which took effect in December 2021, is the most material change to the risk assessment standards in more than a decade, including stronger requirements to understand the IT environment of an entity and internal controls. At the same time, the power of Artificial Intelligence (AI) technologies — including machine learning, natural language processing, and sophisticated data analytics — have become the disruptive powers in the professional services sphere (Munoko et al., 2020). This paper develops a multi-theoretical framework integrating the Technology Acceptance Model (TAM), Diffusion of Innovation (DOI) Theory, Institutional Theory, Agency Theory, and the Resource-Based View (RBV) to explain how ISA 315 compliance and AI adoption jointly determine audit efficiency and audit effectiveness in Iraqi auditing firms, mediated by contextual barriers and facilitators. Nine formal hypotheses are advanced. The paper argues that compliance with ISA 315 functions as a regulatory catalyst for AI adoption, and that the efficiency and effectiveness benefits of both compliance and adoption are filtered through the structural and institutional conditions of the Iraqi operating environment.

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