Title:
Reconfiguring Accounting Information Systems in Digital Twin Environments and Its Impact on Audit Quality: Nonlinear Mechanism-based Evidence

Authors:
Amin ElSayed Ahmed Lotfy, Egypt

Abstract:

Purpose

This study examines how the reconfiguration of Accounting Information Systems (AIS) within Digital Twin Environments influences audit quality. Moving beyond conventional digital transformation perspectives, the study develops an integrated framework that explains how digitally synchronized environments reshape accounting information architectures and subsequently affect audit outcomes. The study further investigates whether these effects operate through nonlinear mechanisms rather than simple linear relationships.

Design/Methodology/Approach

The study adopts a quantitative empirical design using panel-data analysis. A multidimensional Digital Twin Readiness Index was developed to capture firms’ digital synchronization capabilities, while AIS development and audit quality were operationalized using established accounting and auditing measures. Fixed-effects regression models, mediation analysis, nonlinear specifications, and robustness procedures were employed to examine direct, indirect, and complexity-related effects. The empirical analysis was conducted using a large firm-year dataset from an emerging market context.

Findings

The findings indicate that Digital Twin Environments significantly enhance AIS development and improve audit quality. The results further reveal that AIS function as a critical organizational mechanism through which digital capabilities are translated into audit outcomes. In addition, the relationship between digital transformation and audit quality exhibits significant nonlinear dynamics. While increasing digital maturity initially improves audit efficiency and information reliability, excessive digital complexity reduces marginal benefits and introduces additional audit challenges. The robustness analyses confirm the stability and consistency of the reported findings.

Originality/Value

The study contributes to the literature by introducing Digital Twin Environments into accounting and auditing research, positioning AIS reconfiguration as a central explanatory mechanism, and demonstrating the importance of nonlinear effects in understanding audit-quality outcomes. The study offers a structural explanation that integrates digital transformation, accounting information systems, and auditing within a unified analytical framework.

Theoretical, Practical and Social Implications

The study extends agency theory, information asymmetry theory, and systems theory by incorporating digitally synchronized environments and complexity effects. Practically, the findings provide guidance for firms, auditors, and regulators regarding AIS investments and digital assurance strategies. Socially, the study supports the development of more transparent, reliable, and timely financial reporting systems capable of strengthening stakeholder confidence and improving accountability in increasingly digital economies.

DOI: https://doi.org/10.51505/IJEBMR.2026.10803