This study aims to develop a model for advancing IT auditing within Iran's public sector auditing system, employing a grounded theory approach. The research population comprised academic and professional experts in the fields of auditing and information technology. Participants were selected through purposive sampling based on the theoretical saturation criterion; a total of 15 experts, including university professors and professional auditors with a minimum of 10 years of relevant experience, were ultimately selected, with theoretical saturation confirmed after the 15th interview. Data were collected through semi-structured face-to-face and virtual interviews conducted in 2025 and analysed using Strauss and Corbin's grounded theory method in MAXQDA 24 software through three sequential stages of open, axial, and selective coding. The analysis yielded 80 initial codes, 77 concepts, 54 subcategories, and 26 main categories, organised within a paradigmatic model encompassing causal conditions, contextual conditions, intervening conditions, strategies, and consequences. The central phenomenon was identified as "the transition of the public sector auditing system from compliance-orientation toward digital financial oversight." This study presents an indigenous integrated model for IT auditing development in Iran's public sector, charting a pathway from compliance-based auditing toward the integration of data analytics and proactive control within the framework of general and application IT controls evaluation in the public sector auditing system