Innovations in the digital world have traversed different sectors in business and influenced their operations. E-commerce is one of the most influential effect of business digitization. As such, there is an increased need for stakeholders in the business world to adjust to these new developments. This paper will focus on the effect of e-commerce on the audit field. Specifically, how websites use audit logics to create assurance and construct auditability. The discussion will be based on eBay an online sales website that brings together a large pool of sellers and buyers. Traditionally the primary focus in auditing was the financial data, which was used to provide an opinion on the auditee. In the contemporary world the position of the auditor is still very important, however, the scope of work involved needs to extend to the digital world so as to maintain relevance. According to Ingrid (2017), auditors need to be adaptable if they are to achieve success in new audit spaces by going beyond the financial reporting domain.
According to Power (1996, p.289-315), auditability constitutes three concepts; measurability, quality management and the ability to rely on experts. For a website to construct auditability it must provide means of measuring the factor being considered. Its system should be created in such a way that it is possible to provide quality assurance to the public or the users in general. Finally, the website should provide a platform that allows reliance on perceived experts. The importance of user reviews in e-commerce cannot be overemphasized since they play a fundamental role in the construction of auditability.
On eBay, buyers are given the liberty to review the performance of the sellers they engage with. Voluntary review, in this case, helps to establish the independence of the buyer from the seller. once the transaction is complete a buyer can rate the seller's performance by giving either positive, neutral or negative feedback. The feedback given is then added to the seller's detailed rating and their overall feedback. the total score is given as a percentage of positive feedback that a seller receives. detailed ratings are based on four factors; accuracy on the item's description, shipping time, charges on shipping and handling and how well the seller communicates. stars are used to show the seller's score for each of the factors. One star shows the lowest score and 5 stars the highest. The website also shows the number of buyers that have left performance feedback on the seller's performance.
To construct auditability, one needs to provide quality assurance through image management of the factor inherent in the audit. Online reviews have a big impact on a seller's image hence the need for websites to put measures to protect sellers without compromising on quality. According to Charlton (2015), 61% of customers read online reviews before making purchase decisions. One such measure that eBay has taken is to identify reviewers as verified or unverified. Verified reviewers are those that have bought the product and consequently have a stronger implied authority on quality.
The website also confers upon the seller the option to publicly defend themselves against negative and neutral feedback so that other prospective buyers understand the dispute. When buyer and seller solve the dispute that led to the negative feedback the buyer has the option to remove the negative review at their discretion. The policy at eBay also allows the removal of a negative feedback if the requisite policy was not followed. The interaction between the website, the seller and the buyer all move towards ensuring that only quality feedback is conveyed to prospect customers. The measures were taken by eBay work towards improving the customer perceived quality which according to Parasuraman, Zeithaml and Berry (1998, pp 12-40) is the global attitude or judgement on the superiority of service in relation to competition
Online reviewers affect greatly the choices of other users this is a clear indicator that users rely on the information so provided. According to Chen (2008, p.1977-1992), online recommendations from consumers have more influence than those of online experts such as manufacturers. Reliance on an online reviewer on eBay is highly subjective. Users are expected to understand that verified reviewers have bought the product and should make a judgement on whether the resultant review is credible. Products reviews and seller's overall feedback are shown separately. By doing this, eBay allows buyers to view the credibility of a seller holistically and at the same time see the products' information. To make reviews more reliable the website stipulates that all reviews must be within its content policy. Where a user finds a particular review inappropriate they have an option to report it and have the matter investigated by eBay who then take the appropriate action. Since eBay constitutes a large pool of sellers and buyers peer reviews for the feedback given is possible this goes further to ascertain the credibility of reviews.
Audit basically involves carrying out tests and collecting evidence from which an opinion on the auditee is derived. Users on e-commerce websites do not follow these procedures before offering their opinion on a seller's service or the products quality. All the same, the validity of the of their opinion cannot be dismissed since it is relied upon by other users. The expertise of reviewers cannot be established with certainty instead it is subjective to the user seeking to rely on it. Concern can be raised on the objectivity of a reviewer who in this case appears to be a lay expert. As Dimitrova et al (2013) put it,objectivity includes the elimination of possible effects that conflict of interest, others' influence and bias may have on the judgement of an expert. On eBay users leave reviews at their own discretion and choice. To maintain consistency reviews on eBay are written in association with a specific product and the seller's name. the fact that only eBay can remove a review regardless of whether it is good or bad enhances the independence of the reviewer from the seller who in this case is the auditee.
According to Chen, Dhanasobhon and Smith (2008) reviews are not created equal some are perceived to be more helpful than others. This provides the basis for the discussion on the quality of a particular source and the resultant effect on buyers' purchases. To enhance the quality of the information provided by reviewers eBay has embraced the use of peer reviewing in addition to promoting the use of text reviews. Texts help to provide more information on the rating given to a particular seller so that a buyer can evaluate the helpfulness of that review. Finally, eBay provides a rating on a particular review which is shown next to their user ID and ultimately used to position the reviewer against other top reviewers.
Websites such as eBay have materialized audit logics in the virtual by using online reviews to create auditable environments. The vastness and diversity of online reviews form the basis through which opinions on the quality of those carrying out their businesses on online platforms. The dynamics in e-commerce help to create accountability first on the seller then on the providers of reviews. One of the primary roles of auditing is to ensure accountability of the auditee and the virtual world has devised means towards this goal, therefore, creating auditability. To show how eBay constructs auditability one should consider the following. First, the use stars and percentages to measure the quality of service a seller offers a particular buyer the aggregate of which gives his/her overall score. Secondly, the fact that online reviews are a form of providing quality assurance and provide insight on the image of a seller and making the information public to all users seeking to transact on the website. Lastly one should take into account that buyers rely on other users for insights on purchases they intend to make. The website has also made efforts to ensure the review process is fair for all and hence is reliable. However, like many other websites, the main challenge is ascertaining the quality of information so provided by online reviewers and the validity of the same. As such it is important to note that judgement on the quality of information is highly subjective.
Charlton, G. (2015). E-commerce consumer reviews: why you need them and how to use them. [online] Econsultancy. Available at: https://econsultancy.com/blog/9366-ecommerce-consumer-reviews-why-you-need-them-and-how-to-use-them [Accessed 8 Apr. 2018].
Chen, P.Y., Dhanasobhon, S. and Smith, M.D., 2008. All reviews are not created equal: The disaggregate impact of reviews and reviewers at amazon. com.
Chen, Y.F., 2008. Herd behaviour in purchasing books online. Computers in Human Behavior, 24(5), pp.1977-1992.
Dimitrova, J., Gorgieva-Trajkovska, O. and Kostadinovski, A., 2013. Experts inclusion in the audit for better audit reports. 2013.
Jeacle, I., 2017. Constructing audit society in the virtual world: the case of the online reviewer. Accounting, Auditing & Accountability Journal, 30(1), pp.18-37.
Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1988), "SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality", Journal of Retailing, Vol. 64 No. 1, pp. 12-40.
Power, M., 1996. Making things auditable. Accounting, organizations and society, 21(2-3), pp.289-315.
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