Technology adoption in audit of information systems: Ethiopian audit firms’ perspective
Vol 8, Issue 13, 2024
VIEWS - 46 (Abstract) 13 (PDF)
Abstract
Today’s automation of the audit process increasingly relies on electronic auditing, especially computer-assisted audit techniques (CAATs), and has become a global necessity. Therefore, this study aims to explore the influence of technological, organizational, and environmental (TOE) factors on audit firms’ adoption of CAATs in developing countries, focusing on Ethiopia. The research employed a quantitative approach and gathered 113 valid responses from certified external auditors in Ethiopian audit firms. The data was then analyzed through the Partial Least Squares Structural Equation Modeling (PLS-SEM) method. The findings show that relative advantage and compatibility are the significant technological attributes influencing CAAT adoption in Ethiopian audit firms. Besides, auditors’ information technology (IT) competency was a significant organizational attribute influencing CAAT adoption. Environmental attributes such as the complexity of the client’s accounting information system (AIS) and the professional body support significantly impact the adoption of CAATs. Additionally, the size of an audit firm reduces the impact of clients’ AIS complexity on the adoption of CAATs in Ethiopian audit firms. The findings underscore the significance of CAAT adoption in audit firms and offer valuable insights for policymakers and standard setters in crafting legislation for the Ethiopian audit industry. This study represents the first scholarly effort to provide evidence of CAAT adoption in audit firms in developing countries like Ethiopia.
Keywords
Full Text:
PDFReferences
AABE. (2022). Audit firms Established under Proclamation 847/2006. Accounting and Auditing Board of Ethiopia.
Abed, S. (2020). Social commerce adoption using TOE framework: An empirical investigation of Saudi Arabian SMEs. International Journal of Information Management, 53(102118). https://doi.org/10.1016/j.ijinfomgt.2020.102118
Ahmi, A., & Kent, S. (2012). The utilisation of generalized audit software (GAS) by external auditors. Managerial Auditing Journal, 28(2), 88–113. https://doi.org/10.1108/02686901311284522
AICPA. (2008). International Financial Reporting Standards (IFRS)—and AICPA Backgrounder. American Institute of Certified Public.
Al-Hiyari, A., Said, N. A., & Hattab, E. (2019). Factors that influence the use of computer-assisted audit techniques (CAATs) by internal auditors in Jordan. Academy of Accounting and Financial Studies Journal, 23(3), 1–15.
Al-Okaily, M., Alqudah, H. M., Al-Qudah, A. A., et al. (2022). Examining the critical factors of computer-assisted audit tools and techniques adoption in the post-COVID-19 period: internal auditors perspective. VINE Journal of Information and Knowledge Management Systems, 54(5), 1062–1091. https://doi.org/10.1108/vjikms-12-2021-0311
Al-Qudah, A. A., Al-Okaily, M., & Alqudah, H. (2021). The relationship between social entrepreneurship and sustainable development from economic growth perspective: 15 ‘RCEP’ countries. Journal of Sustainable Finance & Investment, 12(1), 44–61. https://doi.org/10.1080/20430795.2021.1880219
Awuah, B., Onumah, J. M., & Duho, K. C. T. (2021). Determinants of adoption of computer‐assisted audit tools and techniques among internal audit units in Ghana. THE ELECTRONIC JOURNAL OF INFORMATION SYSTEMS IN DEVELOPING COUNTRIES, 88(2). Portico. https://doi.org/10.1002/isd2.12203
Axelsen, M., Green, P., & Ridley, G. (2017). Explaining the information systems auditor role in the public sector financial audit. International Journal of Accounting Information Systems, 24, 15–31. https://doi.org/10.1016/j.accinf.2016.12.003
Bertrand, J. T. (2004). Diffusion of Innovations and HIV/AIDS. Journal of Health Communication, 9, 113–121. https://doi.org/10.1080/10810730490271575
Braun, R., & Davis, H. (2003). Computer-assisted audit tools and techniques: analysis and perspectives. Managerial Auditing Journal, 18(9), 725–731. https://doi.org/https://doi.org/10.1108/02686900310500488
Chandra, S., & Kumar, K. N. (2018). Exploring Factors Influencing Organizational Adoption of Augmented Reality in E-Commerce: Empirical Analysis Using Technology-Organization-Environment Model. Journal of Electronic Commerce Research, 19(3), 237–265.
Chang, H. -J., Eckman, M., & Yan, R. -N. (2011). Application of the Stimulus-Organism-Response Model to the Retail Environment: The Role of Hedonic Motivation in Impulse Buying Behavior. The International Review of Retail, Distribution and Consumer Research, 21(3), 233–249. https://doi.org/10.1080/09593969.2011.578798
Chiu, C. -Y., Chen, S., & Chen, C. -L. (2017). An Integrated Perspective of TOE Framework and Innovation Diffusion in Broadband Mobile Applications Adoption by Enterprises. International Journal of Management, Economics and Social Sciences, 6(1), 14–39.
Curtis, M. B., & Payne, E. A. (2008). An Examination of Contextual Factors and Individual Characteristics Affecting Technology Implementation Decisions in Auditing. International Journal of Accounting Information Systems, 9, 104–121. https://doi.org/10.1016/j.accinf.2007.10.002
Daoud, L. (2023). Predictors of Auditors’ Usage of CAATs: The Role of Top Management Support and Trust. Information Sciences Letters, 12(5), 1841–1850. http://doi.org/10.18576/isl/120528
Daoud, L., Marei, A., Al-Jabaly, S. M., et al. (2021). Moderating the Role of Top Management Commitment in Usage of Computer-Assisted Auditing Techniques. Accounting, 7, 457–468. https://doi.org/10.5267/j.ac.2020.11.005
Davidson, R. A. (1993). A Note on the Association between Audit Firm Size and Audit Quality. Contemporary Accounting Research, 9(2), 479–488. https://doi.org/10.1111/j.1911-3846.1993.tb00893.x
Debreceny, R., Lee, S.‐L., Neo, W., et al. (2005). Employing Generalized Audit Software in the Financial Services Sector: Challenges and Opportunities. Managerial Auditing Journal, 20(6), 605–18. https://doi.org/10.1108/02686900510606092
Faul, F., Erdfelder, E., Buchner, A., et al. (2009). Statistical Power Analyses Using G*Power 3.1: Tests for Correlation and Regression Analyses. Behaviour Research Methods, 41(4), 1149–1160. https://doi.org/10.3758/BRM.41.4.1149
Fornell, V., & Larcker, C. (1981). Evaluating structural equation models with observable variables and measurement error. Journal of Marketing, 18(1), 39–50. https://doi.org/https://doi.org/10.1177/002224378101800104
Francis, J. R., & Yu, M. D. (2009). Big 4 Office Size and Audit Quality. Accounting Review, 84(5), 1521–1552.
Ghobakhloo, M., Arias‐Aranda, D., & Benitez‐Amado, J. (2011). Adoption of E-commerce Applications in SMEs. Industrial Management Data Systems, 111(8), 1238–1269. https://doi.org/10.1108/02635571111170785
Hair, J. F., Risher, J. J., Sarstedt, M., et al. (2019). When to use and how to report the results of PLS-SEM. European Business Review, 31(1), 2–24. https://doi.org/10.1108/EBR-11-2018-0203
Hair, J., Hult, G., Ringle, C., et al. (2017). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). Los Angeles, California: Sage Publication.
Hameed, M. A., & Counsell, S. (2014). Establishing Relationships between Innovation Characteristics and Innovation Adoption in Organizations: A Meta-Analysis Approach. International Journal of Innovation Management, 18(1), 1–32. https://doi.org/10.1142/S1363919614500078
Henseler, J., Ringle, C., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modelling. Journal of the Academy of Marketing Science, 43(1), 115–135. https://doi.org/10.1007/s11747-014-0403-8
Hooper, D., Coughlan, J., & Mullen, M. (2008). Structural equation modelling: Guidelines for determining model fit. Electronic Journal of Business Research Methods, 6(1), 53–60. https://doi.org/10.21427/D7CF7R
Hu, L., & Bentler, P. (1998). Fit indices in covariance structure analysis: Sensitivity to under parameterized model misspecification. Psychological Methods, 3(4), 424–453. https://doi.org/10.1037/1082-989X.3.4.424
Ismail, I., Haron, H., Ibrahim, D. N., et al. (2006). Service Quality, Client Satisfaction and Loyalty towards Audit Firms: Perceptions of Malaysian Public Listed Companies. Managerial Auditing Journal, 21(7), 738–756. https://doi.org/10.1108/02686900610680521
Janvrin, D., Bierstaker, J., & Lowe, D. J. (2008). An Examination of Audit Information Technology Use and Perceived Importance. Accounting Horizons, 22(1), 1–21. https://doi.org/10.2308/acch.2008.22.1.1
Kee, P. L., Kok, C. H., Lau, A., et al. (2013). Internet Technologies Usage by Audit Firms in Malaysia. Asian Academy of Management Journal of Accounting and Finance, 9(1), 47–66.
Kothari, C. R. (2004). Research Methodology: Methods and Techniques. Daryaganj, New Delhi: New Age International (P) Limited Publishers.
Lefebvre, L., Lefebvre, E., Elia, E., et al. (2005). Exploring B-to-B e-commerce adoption trajectories in manufacturing SMEs. Technovation, 25(12), 1443–1456. https://doi.org/10.1016/j.technovation.2005.06.011
Lestari, D., Mardian, S., & Firman, M. A. (2020). Why Don’t Auditors Use Computer-Assisted Audit Techniques? A Study at Small Public Accounting Firms. The Indonesian Accounting Review, 10(2), 105–116. https://doi.org/10.14414/tiar.v10i2.1974
Lia, H., Daia, J., Gershbergb, T., et al. (2018). Understanding Usage and Value of Audit Analytics for Internal Auditors: An Organizational Approach. International Journal of Accounting Information Systems, 28, 59–76. https://doi.org/10.1016/j.accinf.2017.12.005
Lowe, D., Bierstaker, J. L., Janvrin, D. J., et al. (2017). Information Technology in an Audit Context: Have the Big 4 Lost Their Advantage? Journal of Information Systems, 32(1), 87–107. https://doi.org/10.2308/isys-51794
Lutfi, A., & Alqudah, H. (2023). The Influence of Technological Factors on the Computer-Assisted Audit Tools and Techniques Usage during COVID-19. Sustainability, 15(7704), 1–22. https://doi.org/10.3390/su15097704
Mahzan, N., & Lymer, A. (2009). Examining Motivations to adopt Computer Assisted Audit Tools and Techniques (CAATTs): Cases of UK Internal Auditors. In: Proceedings of the International Business Information Management Conference (12th IBIMA). pp. 871–881.
Mao, H., Liu, S., Zhang, J., et al. (2016). Information Technology Resource, Knowledge Management Capability, and Competitive Advantage: The Moderating Role of Resource Commitment. International Journal of Information Management, 36(6), 1062–1074. https://doi.org/10.1016/j.ijinfomgt.2016.07.001
Marei, D. A., & Iskandar, P. E. (2020). The Impact of Computer Assisted Auditing Techniques (CAATs) on Development of Audit Process: An Assessment of Performance Expectancy of By the Auditors. International Journal of Management and Commerce Innovations, 7(2), 1199–1205.
Maroufkhani, P., Tseng, M., Iranmanesh, M., et al. (2020). Big data analytics adoption: Determinants and performances among small to medium-sized enterprises. International Journal of Information Management, 54(102190). https://doi.org/ 10.1016/j.ijinfomgt.2020.102190
Martínez, H., Skournetou, D., Hyppölä, J., et al. (2014). Drivers and Bottlenecks in the Adoption of Augmented Reality Applications. Journal of Multimedia Theory and Application, 1, 27–44. https://doi.org/10.11159/jmta.2014.004
Oliveira, T., & Martins, M. F. (2011). Literature Review of Information Technology Adoption Models at Firm Level. The Electronic Journal Information Systems Evaluation, 14(1), 110–121.
Pedrosa, I., Costa, C. J., & Aparicio, M. (2020). Determinants Adoption of Computer-Assisted Auditing Tools (CAATs). Cognition Technology and Work, 22(3), 565–583. https://doi.org/10.1007/s10111-019-00581-4
Purnamasari, P., Amran, N. A., & Hartanto, R. (2022). Modeling computer-assisted audit techniques (CAATs) in enhancing the Indonesian public sector. F1000Research, 11(559), 1–22. https://doi.org/10.12688/f1000research.121674.2
Rahi, S., Ghani, M., Alnaser, F., et al. (2018). Investigating the role of a unified theory of acceptance and use of technology (UTAUT) in Internet banking adoption context. Management Science Letters, 8(3), 173–186. https://doi.org/10.5267/J.MSL.2018.1.001
Rogers, E. M. (2003). Diffusion of Innovations, 5th ed. New York, United States: University of Illinois at Urbana-Champaign’s Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship.
Rosli, K., Yeow, P. H., & Siew, E.-G. (2013). Adoption of Audit Technology in Audit Firms. In: Proceedings of the 24th Australasian Conference on Information Systems.
Sabherwal, R., Jeyaraj, A., & Chowa, C. (2006). Information System Success: Individual and Organizational Determinants. Management Science, 52(12), 1849–1864. https://doi.org/10.1287/mnsc.1060.0583
Sagar, A., & Ramanathan, K. (2022). Factors that Play a Role in Improving the Efficiency of Continuous Audits Using Computer Assisted Audit Techniques in Enterprises Including Healthcare Units. Cardiometry, (24), 385–392. https://doi.org/10.18137/cardiometry.2022.24.385392
Samagaio, A., & Diogo, T. A. (2022). Effect of Computer Assisted Audit Tools on Corporate Sustainability. Sustainability, 705, 1–20. https://doi.org/10.3390/su14020705
Siew, E.-G., Rosli, K., & Yeowa, P. H. (2020). Organizational and Environmental Influences in the Adoption of Computer-Assisted Audit Tools and Techniques (CAATTs) by Audit Firms in Malaysia. International Journal of Accounting Information, 36, 1–19. https://doi.org/10.1016/j.accinf.2019.100
Skousen, C. J., & Wright, C. J. (2006). Contemporaneous Risk Factors and the Prediction of Financial Statement Fraud. SSRN. http://doi.org/10.2139/ssrn.938736
Smidt, L., Steenkamp, L., Ahmi, A., et al. (2021). Assessment of the Purpose of the Use of GAS: A Perspective of Internal Audit Functions in Australia. International Journal of Information Systems in the Service Sector, 65–82. https://doi.org/10.4018/IJISSS.2021040105
Tan, K. S., Chong, S. C., Lin, B., et al. (2009). Internet-Based ICT Adoption: Evidence from Malaysian SMEs. Industrial Management and Data Systems, 109(2), 224–244. https://doi.org/10.1108/02635570910930118
Thong, J. Y. (1999). An Integrated Model of Information Systems Adoption in Small Businesses. Journal of Management Information Systems, 15(4), 187–214. https://doi.org/10.1080/07421222.1999.11518227
Tornatzky, L. G., & Fleischer, M. (1990). The Processes of Technological Innovation. Lexington, Massachusetts: Lexington Books.
Venkatesh, V., & Bala, H. (2012). Adoption and Impacts of Interorganizational Business Process Standards: Role of Partnering Synergy. Information Systems Research, 23(4), 1131–1157. https://doi.org/10.1287/isre.1110.0404
Widuri, R., & Gautama, Y. (2020). Computer-Assisted Audit Techniques (CAATs) for Financial Fraud Detection: A Qualitative Approach. In: Proceeding of the 2020 International Conference on Information Management and Technology. https://doi.org/10.1109/ICIMTech50083.2020.9211280
Zhu, K., & Kraemer, K. L. (2005). Post-Adoption Variations in Usage and Value of E-Business by Organizations: Cross-Country Evidence from the Retail Industry. Information Systems Research, 16(1), 61–84. https://doi.org/10.1287/isre.1050.0045
DOI: https://doi.org/10.24294/jipd8819
Refbacks
- There are currently no refbacks.
Copyright (c) 2024 Fekadu Agmas Wassie, Lakatos László Péter
License URL: https://creativecommons.org/licenses/by/4.0/
This site is licensed under a Creative Commons Attribution 4.0 International License.