Institutionalising Digital Audit Capability Framework in the Malaysian Public Sector: Technology Readiness, Digital Governance and Auditor Competency

Abstract

Digital transformation is changing how governments process financial transactions, manage records, assess risk and demonstrate accountability. Public-sector internal audit functions are progressively replacing fragmented manual procedures with electronic working papers, data analytics, dashboards and audit management systems. However, technology implementation alone does not create an effective digital audit function because its value depends on reliable data, appropriate governance, competent auditors and organisational support. This qualitative study examines the development of digital audit capability in the Malaysian public-sector internal audit functions and proposes an integrated framework based on technology readiness, digital governance and auditor competency. The study draws on semi-structured interviews with senior public-sector internal audit representatives. Thematic analysis identifies system integration, data accessibility, trustworthy digital processes, multidisciplinary competency and management commitment as the main conditions supporting digital audit capability. The Malaysian context demonstrates a progressive but uneven transition among government internal audit departments towards audit management systems, online audit workflows and dashboard-based monitoring. The proposed framework positions digital auditing as an institutional capability-development process rather than a technology-acquisition exercise. The study contributes a context-sensitive framework that can guide government agencies in strengthening digital audit implementation, audit effectiveness and public accountability.