Revising ISA240 in a digital world: the sociomaterial perspective on fraud, technology, and stakeholder influence

This study explores how various stakeholder groups engage with the IAASB’s Exposure Draft 240 (ED-240) on auditors’ responsibilities relating to fraud. It focuses on the influence of sociomaterial factors, highlighting the interplay between professional interests, regulatory demands, and emerging technologies. The objective is to understand how these elements shape stakeholder participation and contribute to the evolution of auditing standards. The research uses qualitative content analysis on 89 comment letters submitted in response to ED-240. MAXQDA software was used to categorize responses by stakeholder type, geographic distribution, agreement level, and references to emerging technologies. The study is grounded in sociomaterial theory, examining how social and material factors are intertwined in the standard-setting process. The accounting profession, especially the Big Four, emerged as the most active participants, positioning themselves as technological leaders. Respondents from Europe and North America dominated, reflecting the role of strong institutional environments in enabling engagement. While most stakeholders supported ED-240, they also highlighted areas for improvement, with technology adoption asymmetries limiting broader participation. This study contributes new insights by applying sociomaterial theory to audit standard-setting and demonstrating how technological and institutional forces co-shape regulatory outcomes. It highlights the power dynamics within standard-setting processes and the challenges faced by smaller stakeholders in adapting to digital advancements. The findings offer practical implications for regulators and policymakers aiming to create inclusive, forward-looking audit standards.