Investigative Audit Competencies and Mechanisms: Insights from Auditor Perceptions

Abstract

This study examines the relationship between investigative audit competencies and the implementation of audit mechanisms among independent auditors in Malaysia. Grounded in Human Capital Theory (HCT), investigative audit competencies are conceptualised as a higher-order construct comprising knowledge and skills, investigative techniques, and professional experience. The increasing complexity of financial misconduct and fraud has heightened the need for auditors equipped with specialised competencies to support effective audit practices. A quantitative correlational research design was employed using data collected from 102 independent auditors practising in Klang Valley, Malaysia. Data were analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM). The findings suggest a significant positive relationship between investigative audit competencies and the implementation of audit mechanisms, indicating that auditors with stronger competencies tend to report greater implementation of audit mechanisms in professional practice. This study contributes to the investigative auditing literature by applying Human Capital Theory to explain the role of auditor competencies in audit mechanism implementation. Practically, the findings provide insights for audit practitioners, professional bodies, and policymakers regarding the importance of competency development in strengthening investigative audit practices. From an educational perspective, the findings suggest that competencies perceived as important by practising auditors may warrant greater emphasis within accounting education and professional development programs. This study is limited to independent auditors in Klang Valley and relies on self-reported perceptions, which may limit the applicability of the findings to other contexts. Future research may extend the investigation to different geographical regions and professional settings while examining the influence of organisational, technological, and regulatory factors on audit practice.