University Auditing in the Digital Era

Challenges and Lessons for Higher Education Professionals and CAEs

Sezer Bozkus Kahyaoglu, Erman Coskun

• Publisher: CRC Press
• Year: 2022
• Print ISBN: 9781032229874
• eBook ISBN: 9781000563009
• Edition: 1
• Topic: Business
• Subtopic: Auditing
• Index: Business

This bookexplores how digital transformation is reshaping the manner in which higher education sectors emerge, work, and evolve and how auditors should respond to this challenging and risky digital audit universe in transforming the higher education system. It serves to help professionals to understand the reality of performing the Chief Audit Executive (CAE) role in today's evolving business economy, specifically in the higher education sector. It compares and contrasts the stated IIA standards with the challenges and realities auditors may face and provides alternative scenarios to gaining a "seat at the table."

This book also provides insight into critical lessons learned when executing the CAE role relevant for digitally transforming universities. The main purpose of this study is to rethink the audit culture in the digital era and reveal the key characteristics that are open for improvement so that digitally transforming universities can be audited according to the higher education standards with a digitally supported value-added audit approach. Based on this approach, the audit culture is reassessed considering the digital university conceptual framework and business model. There are two main points to consider for the digital university work environment: traceability and auditability. In this respect, policy recommendations are made for best practices to achieve value-added digital audits in transforming universities.

The book has been written from boththe reality and academic perspectives of two experienced authors. Sezer is a past CAE, CEO, and long-term senior internal auditor who has worked in the internal audit role for various listed companies, financial institutions, and government entities. Erman has extensive information technology and university accreditation knowledge in the global higher education sector. This brings a blend of value-added approaches to the readers and speaks to issues about understanding and dealing with audit culture and business evolution in digitally transforming organizations along with the requirements for upholding IIA standards.

Geared toward theexperienced or new CAE, University Auditing in the Digital Era: Challenges and Lessons for Higher Education Professionals and CAEs can be a tool for all auditors to understand some of the challenges, issues, and potential alternative solutions when executing the role of university auditing. In addition, it can be a valuable reference for university administrators and CIOs, as well as academics and all stakeholders related to the higher education sector.

Chapter 1 Conceptual framework for the digitally transforming university Dynamic model approach

DOI: 10.1201/9781003093008-1

1.1 An overview of the conceptual framework for the digitally transforming university

After the emergence of the higher education (HE) institutions, the higher education system and institutions have experienced various “reformist” periods, starting from ancient times to the present. Nybom (2007) defines these reformist periods at HE institutions as the “HE revolution”. These reformist periods are examined in six major phases¹ in the literature. Although the HE institution has its roots in ancient times, William von Humbolt in Germany led the foundation of modern research universities with scientific and organizational autonomy centered on the production of scientific knowledge in the 19th century (Ben-David and Zloczower 1962). For this reason, the periods that Välimaa (2014) expresses as Humbolt and modern research university periods are essential processes that are the continuation of each other. In this period, the number of universities has increased to meet the demand for engineers and scientists, which have increased with the industrial revolution, and universities have started to integrate into the industrial economy (Bates 2010). Thus, as the number of university graduates increased, the demand for universities increased rapidly, and HE has started to turn into a mass system. By the end of the 20th century, especially in developed and developing nations, it has been accepted that HE plays a key role in the growth of national economies with the emerging of the “knowledge-based economy” (KBE) concept as a result of significantly increasing globalization and availability of information technologies, It has also become an important topic of discussion in the international economy (George 2006). OECD (2002, 2020) makes an institutional classification to measure scientific and technological activities of sectors and they define the HE sector as follows:

…All universities, colleges of technology, and other institutions of post-secondary education, whatever their source of finance or legal status. It also includes all research institutions, experimental stations and clinics operating under the direct control of or administered by or associated with higher education institutions. … The HE sector includes all establishments whose primary activity is to provide post-secondary (tertiary level) education regardless of their legal status.

Wissema (2009) defines this recent period as the “third-generation university-3GU” which is shown in Figure 1.1. In this respect, the 3GU approach is the starting point of this book to explain major needs and expectations for digitally transforming universities in the below sections.

Figure 1.1 Universities’ periods of historical change. Source: Välimaa (2014) and Wissema (2009).

It is a fact that the 3GU is both unavoidable and preferable because the trends that are destroying the 2GU approach are obvious and are summarized in Figure 1.2.

Figure 1.2 Characteristics of universities over the three generations. Source: Wissema (2009).

Due to globalization, there is a need for employment, expectation, and demand models at the international level. In this way, new approaches are introduced that can meet the multidisciplinary learning needs of individuals who have the flexibility to adapt to the fast-changing business environment (Riddell 1996). On the other hand, based on technological advancements, the emergence of educational platforms over the internet and online education opportunities have increased the number of students and the diversity of learning. New education models have also created new data sources on issues such as determining learning needs and evaluating educational outcomes and brought innovations. Because of all these developments, changes and transformations have started in many areas of HE, especially in the business model, strategy, scope, content, and financing of HE.

In a KBE, data are seen as a raw material to be converted into products, processes, or services, and well-educated people with advanced knowledge are needed to handle, analyze, and judge these data (Slaughter and Rhoades 2004). This situation is shaped by neoliberalist² policies accompanying globalization (Vaira 2004). Therefore, in countries where neoliberal policies are dominant, the share of the state in HE is decreasing. In such states, companies have started to take the copyrights of education programs and services by collaborating with HE institutions to raise the flexible and well-educated employees and technology-acumen consumers they need. On the other hand, HE institutions have attempted to look for ways to obtain financing from alternative sources to compensate for the decrease in state support. This situation brought issues such as regulatory institutions, accountability, transparency, performance, and quality assurance in the field of HE institutions. Daniel (2015) summarizes all these developments in the field of HE under the four major headings as economic, technological, social, and educational, and Figure 1.3 indicates the global trends affecting HE institutions.

Figure 1.3 Major developments in higher education. Source: Daniel (2015).

The major development trends summarized by Daniel (2015) as in Figure 1.3 have caused countries around the world to review and restructure their HE systems. George (2006) has revealed that there are two basic models, namely the neoliberal model, and the state-centered model for changing and developing HE systems. According to George (2006), the neoliberal model is based on the theory developed by World Bank theorists and practical examples of the USA, UK, Australia, and New Zealand, and focuses on creating a market where HE institutions can compete with each other by reducing the role of governments in HE (George 2006). The state-centered model expresses state investments and policies that will ensure that HE institutions are closely connected with developing industries, and is concerned with the characteristics of the countries that adopt the Asian economic development model and the comprehensive analysis of European higher education models and many countries of the former Soviet Union. George (2006) defines higher education systems under two headings, namely, the neoliberal model and the state-centered model. The author also points out that these two models can coexist in a country. According to this approach, on the one hand, a higher education system may be closer to a specific model in general, on the other hand, as some of the issues such as financing, management, and curriculum, etc., can be based on the other model. For example, in a public university, administrative issues such as the appointment of faculty members are handled by the state (state-centered model), while the same public university may be under the sponsorship (neoliberal model) of an independent accreditation committee (George 2006).

Whether it is closer to the state-centered model or proceeding with a completely neoliberal model, the shape and content of academic activities have started to change. Changing academic activities also differentiated the management approach of higher education institutions. Changing and differentiating academic operations and management style has transformed HE institutions into business-like organizations, enabling business-objects tools and practices such as performance management and business analytics to be used in HE. These processes of change and transformation in the field of HE is explained in the literature with different theories, approaches, and concepts such as academic entrepreneurship, academic marketization, and new managerialism (Slaughter and Leslie 1997; Deem 2001; Pomeroy 2014).

1.1.1 Knowledge-based economy, academic entrepreneurship, and new managerialism

The primary needs and expectations from the organization and governance of universities have changed over the last few decades. There are two broad sets of ideas about university governance how organizational and decision-making structures within universities are established. According to the first proposition, the university is a “republic of scholars” whereas, in the second one, the university is treated as a “stakeholder organization” (Bleiklie and Kogan 2006). In this respect, these authors argue that emerging knowledge regimes can be divided into two major groups, namely academic capitalist regimes versus public managerialism regimes. Institutional autonomy and academic freedom are taken into consideration in the first idea meant that the leadership and the decision-making processes in the universities are based on collegial decisions made by independent scholars. In the second idea, institutional autonomy is considered a basis for strategic decision-making processes. In this case, the leaders are assumed to see it as their ultimate role to assure the interests of major stakeholders and where the voice of academics within the HE institutions is but one among several stakeholders. In that sense, new managerialism is introduced by the private sector “solution” to the public sector “problem” in the HE industry (Milliken and Colohan 2004).

As a result of the KBE, universities’ entrepreneurial activities and studies for the commercialization of research activities caused HE institutions to display market-oriented and/or profit-oriented behaviors like businesses. Market-like behaviors that are beginning to appear in universities and faculties are defined in the literature with the concept of “academic marketization” (Slaughter and Leslie 1997). The academic marketization brings the vision of the KBE into the HE industry and this vision leads to the transformative influence in higher education and research (HER) in the long term. One consequence of these changes is increasing criticism of education for lacking the human capital needs of a supposedly ever more competitive, extensive KBE (Jessop 2017). Horta (2009) argues that one of the reasons for this rapid change is related to the changing strategy in funding for research by enabling universities to retain and authorize the intellectual property rights considering their discoveries and inventions.

It is a fact that similar progress has occurred in various countries. Some of them are to some extent, coordinated through international agencies such as the OECD, or to a limited extent, emerging independently in response to the same competitive enforcements and the relative power of the KBE as a response to disruptive technologies and economic crise...

Table of contents

• Cover Page
• Half Title Page
• Series Page
• Title Page
• Copyright Page
• Contents
• Abbreviations
• Foreword by Ali Nail Kubali, PhD
• Foreword by Prof. Dr. Lourens Erasmus
• Authors
• Introduction
• Chapter 1 Conceptual framework for the digitally transforming university: Dynamic model approach
• Chapter 2 Visioning the digital era from the audit perspective
• Chapter 3 Lessons for a CAE
• Chapter 4 Establishment of the internal audit function balancing between physical and digital
• Chapter 5 Internal audit resourcing and staffing based on digitally enriched learning spaces
• Chapter 6 Executing the responsibilities of internal audit in digitally transforming universities
• Chapter 7 The impact of the pandemic crisis on higher education institutions with post-COVID auditing perspective
• Concluding remarks
• Index