The Impact of Digital Transformation on the Quality of Internal Auditing: A Field Study on the Public Sector in LIBYA

Abstract

With the accelerating advancement of digital transformation technologies and the growing organizational reliance on intelligent systems and data analytics, the auditing profession is undergoing a substantial paradigm shift that requires a fundamental restructuring of audit tools and procedures to enhance audit quality and strengthen the reliability of audit evidence. This study aims to evaluate the extent of digital transformation utilization within auditing practices, assess its impact on the quality of audit procedures, and identify the organizational, human, and technical challenges that hinder its effective implementation within regulatory and auditing environments.

A descriptive–analytical research design was employed, and data were collected from a sample of 40 auditors working across governmental oversight bodies, external audit firms, and internal audit departments. Statistical analyses included the One‑Sample t‑test, effect size estimation using Cohen’s d, and internal consistency reliability assessment via Cronbach’s Alpha for each construct.

The findings indicated that the level of digital transformation utilization ranged from moderate to high (α = 0.885), supported by strong internal homogeneity as evidenced by inter‑item correlations and corrected item–total correlations. Results further demonstrated a robust and statistically significant positive impact of digital transformation on the quality of audit procedures (α = 0.889), especially in accelerating audit processes, enhancing data accuracy, reducing human error, improving fraud detection capabilities, and strengthening transparency and evidence traceability—accompanied by large effect sizes across all items. Conversely, the study identified several critical impediments to digital transformation, including ambiguous or insufficient digital legislation, limited interoperability between legacy and modern systems, inadequate digital competencies among auditors, heightened cybersecurity risks, and organizational resistance to change. The reliability level of the challenges construct was acceptable (α = 0.759), consistent with its multidimensional structure.

Overall, the study concludes that digital transformation acts as a key strategic enabler for improving audit quality. Its successful implementation, however, depends on addressing regulatory, human, and technical obstacles while simultaneously enhancing auditors’ readiness and institutional digital infrastructure.

The study recommends bridging the existing knowledge gap surrounding digital transformation applications in auditing by organizing specialized scientific seminars, professional workshops, and academic conferences aimed at promoting knowledge dissemination, strengthening digital competencies, and enhancing organizational preparedness for sustainable digital transformation.