the utilisation of generalized audit software (gas) by external auditors
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audit sistemTRANSCRIPT
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The utilisation of generalizedaudit software (GAS)by external auditors
Aidi Ahmi and Simon KentDepartment of Information Systems and Computing,
Brunel University, London, UK
Abstract
Purpose Generalized audit software (GAS) is the tool use by auditors to automate various audittasks. As most accounting transactions are now computerized, auditing of accounting data is alsoexpected to be computerized as well. While GAS is the most popular of computer assisted audit toolsand techniques (CAATTs), research shows that there is little evidence that GAS has been universallyadopted by external auditors. The purpose of this paper is to investigate the utilization of GAS byexternal auditors in the UK. The paper focuses on small and medium-sized audit firms in the UKwhereas most other GAS studies have examined Big 4 firms. Registered statutory auditors havebeen selected as a sample.
Design/methodology/approach A framework was developed to identify a range of relevantfactors which are important when considering the application of GAS. A web-based survey has beenused to gather the perceptions based on the responses from 205 statutory auditors across the UK. Thequestions posed to respondents were mapped against the framework.
Findings The research finds that the utilization of GAS is unusually low among audit firms in theUK. About 73 per cent of external auditors make no use of GAS, due to the perceived limited benefit ofusing GAS for auditing small clients. While some respondents recognized the advantages of GAS, theywere put off by what they believed to be high implementation costs; significant learning curve andadoption process; and lack of ease of use they showed a preference for using traditional manualauditing methods instead.
Research limitations/implications The paper focuses on small and medium-sized auditors, andas such the results cannot be extrapolated to Big 4 auditors. Consequently, the responses andconclusions are relevant to the use of GAS during audits of smaller and medium-sized companieswhich make up the client base of such audit firms.
Originality/value This is one of the few studies that have sought to research the utilization ofGAS by the external auditor.
KeywordsUnited Kingdom, Small to medium-sized enterprises, Auditing, Auditors, Computer software,Computerised auditing, Generalised audit software, Computerised assisted audit tools and techniques
Paper type Research paper
IntroductionVarious computer assisted auditing tools and techniques (CAATTs) have beendeveloped to assist auditors in performing audits on computerized accountancy data.Generalized audit software (GAS) is one of the most commonly used types of CAATTs(Singleton, 2006; Wehner and Jessup, 2005; Debreceny et al., 2005; Braun and Davis, 2003;
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0268-6902.htm
JEL classification M42The authors would like to thank Universiti Utara Malaysia and Ministry of Higher Education,
Malaysia, for providing the sponsorship for this study.
MAJ28,2
88
Managerial Auditing JournalVol. 28 No. 2, 2013pp. 88-113q Emerald Group Publishing Limited0268-6902DOI 10.1108/02686901311284522
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Lovata, 1988). GAS is used by auditors to analyze and audit either live or extracted datafrom a wide range of applications (Debreceny et al., 2005). GAS is data extraction anddata analysis software, which is designed to perform specific audit routines andstatistical analysis. For example, it can browse, analyze, sort, summarize, stratify,sample and apply calculations, conversions and other operations to audit a full set ofaccounting data, as opposed to relying on sampling. While most audits now make use ofelectronic working papers, the audit process itself is often undertaken without theautomation offered by GAS. Auditors still prefer to use traditional auditing proceduresin forming an audit opinion based upon a sample of accounting transactions instead oftesting all the available data.
While there has been previous research into the adoption of GAS, very littleresearch has focused on its use for external auditing. Existing research either focuseson internal auditing, which has different objectives to external auditing, or on amixture of internal and external auditing. This study intends to fill the gap in theresearch literature by evaluating the nature and extent of the utilization of GAS byexternal auditors.
Most large businesses, which have a turnover greater than 6.5 million or a balancesheet total of more than 3.26 million and an average number of employees morethan 50, are required by law in the UK, i.e. The Companies Act, 2006, to be audited byindependent auditors annually. These large entities or even small and mediumenterprises (SMEs) usually make intensive use of information systems for most of theirbusiness and their accounting records. Auditing companies that make use ofcomputerized accounting is sufficient to warrant investment in GAS by externalauditors. This study investigates the current usage and their perception of GAS byexternal auditors.
A web-based online survey has been used to gather the data from external auditors.The research finds that the utilization of GAS is very low among audit firms in the UK.About 73 percent of external auditors make no use of GAS, due to the limited perceivedbenefit of its use for auditing small clients. While some respondents recognizedthe advantages of GAS, they were hindered by what they believed to be highimplementation costs; learning curve and adoption processes; and the lack of ease ofuse they showed a preference for using traditional auditing methods instead. Thosewho used GAS preferred to use interactive data extraction and analysis (IDEA) as anaudit software tool and were mainly using GAS for financial statement auditing.
This paper is organized as follows. Section 2 covers the background of the nature ofGAS and the current usage by external auditors. This background leads to thedevelopment of the three research questions. Section 3 presents a descriptive analysisof the methods used in this study, while the Section 4 provides the detailed findingsfrom the survey with respect to each of research question. Section 5 summarizesthe findings, sets out the limitations of the research and provides implications forfuture research.
Background and development of research questionsThis section discusses prior research on GAS and the topics that led to thedevelopment of research questions to ascertain the extent to which GAS is currentlyadopted by external auditors. The section also seeks to identify the factors thatinfluence whether or not GAS is adopted by external auditors.
Utilisationof GAS by
auditors
89
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Prior researchMost of the studies on GAS usage either examine internal auditors only, a combinationof internal auditors and external auditors, or a mixture with other types of auditorincluding governmental auditors. Different types of auditors have different structuresand different audit objectives. Hence, the factors that will lead to the usage of GAS willbe different. For example, an internal auditor works within the organization and hasdirect access to an organizations information systems, while an external auditor worksfrom the outside the organization and has more limited access to client data. Bothinternal and external auditors also have different audit objectives, where internalauditors are more focused on operational audits, while external auditors focus more soon statutory annual financial statement auditing.
The literature has shown that there is little evidence on GAS usage that specificallyfocuses on external auditors. For example, Mahzan and Lymer (2008) studied theadoption of CAATTs by internal auditors in the UK. Wehner and Jessup (2005) andDebreceny et al. (2005) studied the factors affecting GAS usage on both internal auditorsand external auditors. Braun and Davis (2003) focused on governmental auditors inthe USA. There are also other surveys conducted by professional accounting bodies,for example The Chartered Institute of Public Finance and Accountancy (CIPFA, 2003)and the Annual Software Survey from 1995 to 2006 by The Institute of Internal Auditor(IIA), which were focused on the use of CAATTs by internal auditors. Lovata (1988)and Lovata (1990) investigated auditors from Big Eight accounting firms 20 years ago,but technology usage at that time is arguably obsolete compared with the currenttechnology. Table I shows the list of previous related studies on GAS.
The role of GASGAS can help auditors to detect any misstatements in the financial statements,particularly in achieving the general audit objectives of validity, completeness,ownership, valuation, accuracy, classification and disclosure of the data produced byaccounting software (Debreceny et al., 2005). Examples of GAS include the auditcommand language (ACL), IDEA and ProAudit. These software packages allowauditors to interrogate a variety of accounting systems (Debreceny et al., 2005) andconduct a 100 percent analysis of a clients financial data.
With the benefits described above, GAS usage has been encouraged by auditingstandards. Janvrin et al. (2009a) have identified and tested nine different functions ofCAATTs originating from auditing standards issued by the American Institute of CertifiedPublic Accountants (AICPA). In the UK, auditing standards were issued by the AuditingPractices Board (APB, 2004a, b, c, d, e, 2006). Table II shows the details of CAATTs thatcan be implemented using any GAS according to UK and American auditing standards.
With the wide adoption of technology in a developed country like the UK and thewide functionality and benefits that GAS provides, it should be expected that auditorswould use GAS to audit computerized accounting data. Popular accounting softwareprovider Sage have reported that they already provide software and services to over760,000 small and medium-sized businesses in the UK. The evidence suggests aparadox, in that while there is strong justification for auditors to adopt GAS, theevidence suggests that they do not. In order to quantify the problem and to build onexisting evidence, the first research question in this study is:
RQ1. What is the current status of GAS utilization by external auditors in the UK?
MAJ28,2
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Table I.Prior studies on GAS
Utilisationof GAS by
auditors
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res,
aud
itre
por
tw
riti
ng
,el
ectr
onic
wor
kp
aper
s,in
tern
etse
arch
tool
s,an
dsa
mp
lin
gan
dp
erce
ive
them
asim
por
tan
t,b
ut
use
them
infr
equ
entl
y.
Inad
dit
ion
,IT
spec
iali
stu
seis
infr
equ
ent,
even
by
aud
itor
sw
ho
exam
ine
clie
nts
wit
hco
mp
lex
IT.I
Tu
sean
dp
erce
ived
imp
orta
nce
var
ies
by
firm
size
(continued
)
Table I.
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Yea
rA
uth
orT
itle
Res
pon
den
tT
heo
ryap
pli
edM
eth
odK
eyfi
nd
ing
s
2009
Jan
vri
n,
Dia
ne,
Low
e,D
.Jor
dan
,an
dB
iers
tak
er,
Jam
es
Au
dit
orac
cep
tan
ceof
com
pu
ter
assi
sted
aud
itte
chn
iqu
es
181
aud
itor
sfr
omB
ig4,
nat
ion
al,
reg
ion
alan
dlo
cal
firm
sU
nifi
edT
heo
ryof
Acc
epta
nce
and
Use
ofT
ech
nol
ogy
(UT
AU
T)
Su
rvey
Per
form
ance
exp
ecta
ncy
and
faci
lita
tin
gco
nd
itio
ns
such
asor
gan
izat
ion
alan
dte
chn
ical
infr
astr
uct
ure
sup
por
tin
flu
ence
the
lik
elih
ood
that
aud
itor
sw
ill
use
CA
AT
Ts.
Th
ere
sult
ssu
gg
est
that
aud
itfi
rmm
anag
emen
tm
ayw
ant
tod
evel
optr
ain
ing
pro
gra
ms
and
enh
ance
thei
rte
chn
ical
sup
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tto
incr
ease
CA
AT
usa
ge
2009
Jan
vri
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ne,
Bie
rsta
ker
,Ja
mes
,an
dL
owe,
D.J
ord
an
An
inv
esti
gat
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offa
ctor
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ng
the
use
ofco
mp
ute
r-re
late
dau
dit
pro
ced
ure
s
181
aud
itor
sfr
omB
ig4,
nat
ion
al,
reg
ion
alan
dlo
cal
firm
sD
escr
ipti
ve
stu
dy
Su
rvey
Com
pu
ter-
rela
ted
aud
itp
roce
du
res
are
gen
eral
lyu
sed
wh
enob
tain
ing
anu
nd
erst
and
ing
ofth
ecl
ien
tsy
stem
and
bu
sin
ess
pro
cess
esan
dte
stin
gco
mp
ute
rco
ntr
ols.
Fu
rth
erm
ore,
43p
erce
nt
ofp
arti
cip
ants
ind
icat
eth
atth
eyre
lied
onin
tern
alco
ntr
ols;
how
ever
,th
isp
erce
nta
ge
incr
ease
ssi
gn
ifica
ntl
yfo
rau
dit
ors
atB
ig4
firm
s
Table I.
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Factors that influence the use of GASThere are many factors that influence the use of GAS by auditors. For instance,Janvrin et al. (2009b) found that performance expectancy and organizational and technicalinfrastructure support influences the likelihood that auditors will use CAATTs. Theysurveyed 181 different types of auditors representing Big 4, national, regional and localfirms from different regions of the USA to examine the factors that influence individualauditor acceptance of CAATTs. Wehner and Jessup (2005) studied individual factors,i.e. auditors perception, auditors career, age and gender that influence auditors use ofGAS. Mahzan and Lymer (2008) studied IT adoption, particularly of CAATTs amonginternal auditors, based on the Unified Theory of Acceptance and Use of Technology(UTAUT). Janvrin et al. (2009a) studied the extent to which computer-relatedaudit procedures are used and whether two factors control risk assessment andaudit firm size influence the use of computer-related audit procedures.
Lovata (1988) found three factors that affect the audit procedure used:
(1) the sophistication of the computer system;
(2) the strength of internal controls; and
(3) the characteristics of the clients internal audit department.
Curtis and Payne (2008) suggest that by using longer-term budget and evaluationperiods, audit firms have the ability to influence the implementation of GAS.
Havelka and Merhout (2007) have developed a model of IT audit quality whichcomprise five factors that affect the IT audit quality, after conducting the focus groupstudy on internal auditors in health care product and services organization. Thesefactors include client, IT audit personnel, IT audit organization, target process or systemand audit process/methodology factors.
Mahzan and Lymer (2008) proposed a model of successful CAATT adoption byinternal auditors, comprised of four dimensions covering the issues of factors influencingmotivation, best practices of implementation, performance measurement criteria andchallenges that can become barriers to successful implementation. They found that GAS
Auditing standardUse GAS to SASa ISAb
Evaluate fraud risks AU 316.52 ISA 240.70Identify journal entries and other adjustmentsto be tested AU 316.64 ISA 315.84Check accuracy of electronic files AU 308.33 ISA 500.11, ISA 500.36Re-perform procedures (i.e. aging of accountsreceivable, etc.) AU 308.34 ISA 500.37Select sample transactions from keyelectronic files AU 327.19 ISA 240.70, ISA 330.19Sort transactions with specific characteristics AU 327.61 ISA 240.70, ISA 330.19Test an entire population instead of a sample AU 327.19, AU 327.27 ISA 240.70, ISA 330.19Obtain evidence about control effectiveness AU 316.54 ISA 330.30Evaluate inventory existence andcompleteness AU 314.11 ISA 240 Appendix 2
Notes: aStatement of Auditing Standards (US); bInternational Standard on Auditing (UK and Ireland)Table II.Functions of GAS
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is widely used by internal auditors in the UK and the factors that influence the usage ofGAS include the ability to train employees on the usage of GAS, compatibility of thesoftware within the department and the ability of software to meet the data manipulationneeds. Janvrin et al. (2009b) also suggest that to increase CAATT usage, audit firmmanagement may want to develop training programs and enhance their computertechnical support to increase auditors degree of ease associated with using CAATTs.
Building on the work of previous research, the next research question seeks toaggregate the adoption factors identified in previous studies to find out:
RQ2. What are the factors that influence the use of GAS?
Factors for not utilizing GASWhile there is evidence of a lack of adoption, there is little research attempting toidentify the reasons why external auditors do not use GAS. CAATTs are stillunderutilized in some public accounting firms (Curtis and Payne, 2008; Janvrin et al.,2008). Debreceny et al. (2005) found that there is no evidence that GAS is used by theexternal auditor in their study. One of the reasons is because the client already has anin-house customized system which has the same capabilities of GAS. However,development of such a bespoke system is costly and requires technical expertise thatmay not be available to small firms.
For some of the audit firms, auditing remains a manual process and they have notyet fully adopted computerized tools (Chang et al., 2008). The use of GAS typicallyrequires some computer skills. Auditors need to have at least a basic knowledge ofdatabases and data management. This implies a need for general training for auditorsto use GAS (Singleton, 2006) with a corresponding cost in terms of time and money.This perceived cost may outweigh the perceived benefits derived from adopting GAS.
It is also quite difficult to acquire the data (Brooks and Lanza, 2006). Sometimes,auditors may also have some difficulty in preparing the data for first use (Braun andDavis, 2003), i.e. converting the data from clients system to auditors system andidentify the appropriate data needed for analysis. This also needs some encouragementfor the auditor to understand the various types of client data before it may be used withaudit software.
As the evidence points to a potential drawback of GAS and minimal usage byexternal auditors, the next research question seeks to find out:
RQ3. What are the reasons that external auditors might choose not to adopt GAS?
MethodologyTo answer the above research questions, a research model has been developed. Thissection describes the development of the research model, the method used for datacollection and the nature of the participants involved in this study.
Survey instrument developmentThere are several theories which have been implemented by information systemsresearchers to understand technology acceptance and adoption among auditors( Janvrin et al., 2008; Curtis and Payne, 2008). For example, as shown in Table I, Wehnerand Jessup (2005), Mahzan and Lymer (2008) and Curtis and Payne (2008) used theUTAUT (Venkatesh et al., 2003); Schafer and Eining (2002) used the applied theory
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of planned behavior (TPB) (Ajzen, 1991) and a technology acceptance model (TAM)(Davis, 1989); Banker et al. (2002) have applied task-technology fit (TTF) (Goodhue andThompson, 1995); and Lovata (1988) developed her own audit adaptation model basedon Davis and Weber, 1986, model of stress and the systems hierarchy.
In considering the theory adopted by previous researchers, most were focused moreon behavioral intention (UTAUT, TPB and TAM) rather than on understanding theactual use of GAS. The issue here is not just about the intended use of technology, butmore on understanding the use of technology for different audit tasks. Most auditorsprobably understand the usefulness of GAS, but the use of such technology may notapply for a certain types of audit task.
To understand the current usage of GAS and the factors that influence its usage, wehave modified the model of IT audit quality by Havelka and Merhout (2007) to fit theobjectives of this study. They used nominal group techniques to gather the factors thatinfluence the efficiency, effectiveness and quality of the IT audit process. Five differentfactors have been identified which are client, target process or system, IT auditpersonnel, IT audit organization and the audit process or methodology factors. Thesefactors form the basis for the questionnaire, but are complemented by other factors fromprevious research which fit with the objective of this study. Some factors that were notpreviously investigated have also been identified. From the extensive literature reviewand the feedback from various academics and auditors, factors that are not tailored tothe specificity of GAS usage were excluded from the conceptual model.
Consequently, the six factors below have been determined and are presented in theresearch model in Figure 1:
(1) Technological factors factors related to the installation and usage of auditsoftware.
Figure 1.Research model forGAS utilization
GASUsage
TechnologicalFactors
OrganizationalFactors
Audit ProfessionFactors
Client Factors
Personal Factors
External Factors
UseGAS
Not UseGAS
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(2) Organizational factors aspects related to the audit firm.
(3) Audit profession factors aspects within the audit profession.
(4) Client factors aspects relating to the client being audited.
(5) Personal factors factors that are dependent upon the individual auditor.
(6) External factors factors not included in the above categories.
The details of the research model are elaborated in Table III which summarizes thefactors that influence the use of GAS and the sub-items that fall into six categories.There are 41 items that have been identified for the six factors which are derived fromthe previous literature and feedback from the pilot test.
ParticipantsAn online survey has been used to collect data relating to this research. Thequestionnaire was pre-tested with 30 participants 20 lecturers who teach auditingand ten practising auditors. The main purpose of the test was to seek clarificationregarding the wording of both questionnaire instructions and questions (Oppenheim,2001). A total of 49 auditors were then randomly selected for a full pilot survey. A totalof eight questionnaires were returned after a period of one month. This representsa response rate of 16 percent and since no reminders had been issued, this return ratewas considered sufficient to proceed with the main survey.
As at 1 February 2011, there were a total of 12,716 statutory auditors registered underthree recognized supervisory bodies (RSBs) in the UK which are: The Association ofChartered Certified Accountants (ACCA), The Institute of Chartered Accountants inEngland and Wales (ICAEW) and The Institute of Chartered Accountants of Scotland(ICAS). The questionnaire was distributed electronically to a subset of 3,587 statutoryauditors from small and medium sized firms who had publicly available e-mail addresses.
Of the 3,587 questionnaires distributed, 291 e-mails failed to arrive due to incorrecte-mail addresses and 177 actively declined to participate in the survey. These468 questionnaires were excluded from the calculation of the response rate. After threemonths and two reminders, 205 completed questionnaires were returned representinga 6.57 percent return rate. While the percentage might be considered low and couldaffect the ability to generalize the findings, it is still reasonable for this kind of onlinesurvey. It is also worth noting that the sample represented a large proportion of the fullUK population of auditors.
ResultThis section discusses the findings of the study and addresses the research questions.
Demographic resultsTable IV indicates that about 67 percent of the respondents are working in small auditfirms and 33 percent in medium audit firms. Most of the firms are located in Londonand South East, which represent 25 and 21 percent, respectively. The rest are from the otherregions within the UK. Almost 60 percent of the audit firms were from businesses that hadbeen established for more than 40 years. In terms of firms audit department size, 27 percentof respondents were from departments with less than five auditors, while in term of overallfirms size, about 37 percent of respondents were from firms with ten to 49 employees.
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RQ1 findings
RQ1. What is the current status of GAS utilization by external auditors in the UK?
Interestingly 150 (73 percent) of the respondents indicated that their firm did not makeuse of GAS. Some of them were even unaware about the existence of GAS. Table Vshows that only 55 respondents out of 205 were using GAS, with 35 from mid-tier
Element Description Factor
Technologicalfactors
Factors related tothe installation andusage of auditsoftware
Compatibility of software
Up-to-date firms ICT infrastructureEase of useAdequate and sufficient documentation to followEasy to modify and upgrade
Organizationalfactors
Aspects related tothe audit firm
Full support from top managementStrong IT support from IT staffAvailability of IT audit expertise in organizationEffective and adequate INTERNAL training for staffEffective and adequate EXTERNAL training for staffSufficient implementation costSufficient maintenance costEnough resource to use GASInstructed by the management to use GASDemand in auditors promotion policiesWorkloads on multiple audit engagementFinancial budget on audit engagementSufficient time allocated to audit assignment
Auditprofessionfactors
Aspects within theaudit profession
Requirement by auditing standards
Professional audit judgmentThe existence of audit methodology to followLevel of audit riskThe usefulness of the application for auditing
Client factors Aspects relating tothe client beingaudited
Strength of clients internal control systems
Complexity of clients IT environmentComplexity of clients business environmentDifficulty of access to clients dataClient concern about data securityClient business sizeSupport provided by clients IT personnel
Personalfactors
Factors that aredependent upon theindividual auditor
Experience with computerized auditingExperience with larger audit clientsAn attempt to ensure public accountabilityEnough knowledge to use GASUnderstanding of the applicationEasy to become skillful using GASPrefer to use GAS rather than traditional auditIT knowledgeUse GAS regularly in audit assignment
Externalfactors
Factors not includedin the abovecategories
Adequate technical support from vendorsSimilar application has been used by other audit firms
Table III.Factors that influence theuse of audit software
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practice of audit firms and 20 from smaller practices. Similar to the results of previousstudies conducted such as Debreceny et al. (2005), Greenstein and McKee (2004),Greenstein-Prosch et al. (2008) and Janvrin et al. (2008), the results of this study alsosuggest that GAS usage by external auditors is minimal. When asked about number ofyears for which GAS had been implemented, 91 percent of those who use the softwarestated that they have been using the software for more than two years.
The results in Table VI show the usage of GAS categorized by the profile ofthe respondents profiles and by the type of audit firm. It is noted that 173 (84 percent)of the respondents are male. Only 51 of male respondents used GAS comparedto 112 male respondents who did not use GAS. Only four female respondents used
Category Frequency %
Mid-tier practices 68 33.2Smaller practices 137 66.8Total 205 100.0LocationLondon 52 25.4South East 43 21.0Scotland 21 10.2South West 15 7.3West Midlands 15 7.3North West 15 7.3East of England 13 6.3East Midlands 11 5.4Yorkshire and the Humber 11 5.4North East 6 2.9Wales 3 1.5Total 205 100.0Firm age (years)Ten or less 23 11.211-20 26 12.721-30 24 11.731-40 10 4.9Above 40 122 59.5Total 205 100.0Number of auditorsLess than five auditors 55 26.85-9 auditors 44 21.510-20 auditors 34 16.621-50 auditors 31 14.6Over 50 auditors 47 20.5Total 205 100.0Number of employeesLess than ten employees 26 12.710-49 employees 75 36.650-99 employees 31 15.1100-499 employees 49 23.9500-999 employees 4 2.0Over 1,000 employees 20 9.8Total 205 100.0
Table IV.Profile of audit firms
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GAS compared to 28 female respondents who did not use GAS. When asked abouttheir age range, 93 (45 percent) of the respondents stated that they are in the categoryof 45-54 years old. In total, 30 of these were using GAS while another 93 were notusing GAS.
Most of the respondents (169 or 82 percent) work as a partner of the audit firm ofwhich 46 use GAS. The respondents were also asked to indicate the extent of their auditexperience. Results show that 98 percent of respondents had at least six years auditingexperience, and 62 percent of them have a minimum experience of 21 years in the field.The demographic data suggests that the responding auditors are quite experiencedin their career and are thus able to give well-informed answers to the questions.
When asked about the experience in computerized auditing, 40 percent of respondentshad no experience. It was also found that 50 (24 percent) of the respondents had experiencefrom 0 to five years but only 16 of them were using GAS, while another 34 made no use of it.Of the total respondents, 91 (44 percent) stated that they had good IT skills. Fromthose who had good IT skills, 30 of them were using GAS and another 61 were not.
IDEA is still the most popular type of software used for auditing, representing39 percent of the auditors who use GAS. Most of mid-tier firms have developed theirown in-house application to cater for computerized auditing. ProAudit, CCH, IRIS,Mersia and ACL are also among the software that have been chosen by externalauditors. Table VII indicates the type of software that has been used for auditing.
GAS also has been widely used in financial statement auditing rather than in othertypes of auditing. Table VIII indicates the areas in which GAS has been utilized.
This study has also examined the extent to which GAS has been used in auditing.Based on Janvrin et al. (2009a) where they cited from the American Institute of CPAsand from UK auditing standards (ISA 240, ISA 315, ISA 330 and ISA 500), there arenine different CAATTs that can be performed using GAS. The use of GAS wasmeasured by agreement through a Likert scale represented by 1-5, where 1 is never,2 is rarely, 3 is sometimes, 4 is often and 5 is always. The mean responses, shownin Table IX, suggest that respondents assigned higher ratings to evaluate fraud risk(3.67) and to identify journal entries and other adjustments to be tested (3.49).
RQ2 findings
RQ2. What are the factors that influence the use of GAS?
Category of firm TotalMid-tier practice Smaller practice Frequency %
Use of GASYes 35 20 55 26.8No 33 117 150 73.2Total 68 137 205 100.0Number of years using GASDont know 1 0 1 1.8Less than one year 2 0 2 3.61-2 years 0 2 2 3.6More than two years 32 18 50 90.9Total 35 20 55 100.0
Table V.Use of GAS
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Usi
ng
GA
SN
otu
sin
gG
AS
Mid
-tie
rp
ract
ices
Sm
alle
rp
ract
ices
Tot
alM
id-t
ier
pra
ctic
esS
mal
ler
pra
ctic
esT
otal
Tot
al%
Gender
Mal
e31
2051
3092
112
173
84.4
Fem
ale
40
43
2528
3215
.6T
otal
3520
5533
117
150
205
100.
0Auditor
age
(years)
18-2
40
00
01
11
0.5
25-3
44
37
311
1421
10.2
35-4
46
410
1236
4858
28.3
45-5
420
1030
1449
6393
45.4
55an
dab
ove
53
84
2024
3215
.6T
otal
3520
5533
117
150
205
100.
0Position
Dir
ecto
r1
23
12
36
1.5
Par
tner
3016
4626
9712
316
982
.4A
ud
itm
anag
er3
14
414
1822
12.2
Sen
ior
aud
itor
01
11
34
52.
4A
ud
itor
00
11
01
10.
5A
ud
ittr
ain
ee1
01
00
01
0.5
ITau
dit
man
ager
00
00
11
10.
5T
otal
3520
5533
117
150
205
100.
0Experience
inauditing(years)
0-5
10
13
14
52.
46-
102
35
08
813
6.3
11-1
54
15
421
2530
14.6
16-2
03
47
519
2431
15.1
21an
dab
ove
2512
3721
6889
126
61.5
Tot
al35
2055
3311
715
020
510
0.0
Experience
incomputerizedauditing(years)
Non
e0
00
1368
8181
39.5
0-5
115
167
2734
5024
.46-
107
613
35
821
10.2
11-1
58
412
77
1426
12.7
16-2
06
39
12
312
5.9
21an
dab
ove
32
52
810
157.
3T
otal
3520
5533
117
150
205
100.
0IT
skill
Ver
yg
ood
60
68
2432
3818
.5G
ood
1812
3016
4561
9144
.4A
deq
uat
e8
614
840
4862
30.2
Bas
ic2
24
16
711
5.4
Ver
yb
asic
10
10
22
31.
5T
otal
3520
5533
117
150
205
100.
0
Table VI.Use of GAS by
respondents profileand firm types
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Respondents who indicated that their firm utilized GAS were asked what factors wereinfluential in the decision to employ this technology. Responses of 41 items have beencollected to predict auditor usage of GAS. Prior to conducting the factor analysis,Cronbachs a was run to test the reliability of the quantitative data. The result ofCronbachs a demonstrates an a of 0.932. The result of 0.932 is acceptable within anormal context of statistical test where the general guideline states that an a valueabove 0.8 indicates good reliability (Field, 2009).
Factor analysis was run to find a way to summarize the information contained in anumber of original variables into a smaller set of new, composite dimensions or factorswith a minimum loss of information (Hair et al., 2010). Hair et al. (2010) suggest that ifthe factor loadings are 0.50 or greater, they are considered very significant and canbe used for further analysis. Hair et al. (2010) also indicate any item that has more thanone significant loading termed as cross-loading, should be deleted. Out of 41 items,three of them have factor loadings below 0.50 and two items are cross-loaded on twodifferent factors. Thus, a total of five items were excluded from this analysis. Theresults in Table X show that all of the 36 items exhibit large factor loadings.
Factor one, labeled client, consisted of seven items with factor loadings between0.874 and 0.719. Factor two, labeled job relevance, consisted of six items with loadings
Type of GAS Frequency %
IDEA 26 39.4ProAudit 7 10.6In House Application 7 10.6CCH 6 9.1IRIS 3 4.5Mercia 3 4.5ACL 3 4.5Microsoft Excel 2 3.0Microsoft Access 2 3.0Others 7 10.6Total 66 100.0
Note: Participant could use more than one audit software
Table VII.Type of auditsoftware used
Type of taskNever
(1)Rarely
(2)Sometimes
(3)Often
(4)Always
(5) n Mean SD
Financial statement auditing 2 5 8 11 27 53 4.06 1.183Investigation auditing 12 6 12 7 5 42 2.69 1.370Continuous auditing 16 5 7 6 10 44 2.75 1.616Control monitoring 18 7 5 5 7 42 2.43 1.548Risk management 18 2 4 9 7 40 2.63 1.644Ad hoc testing 13 6 11 8 5 43 2.67 1.393Other 15 0 1a 0 1b 17 1.35 1.057
Notes: aFor all statutory audits pension funds, charities, companies, limited liability partnerships;bsubstantive testing where there is a large population of low value items and/or automated processes
Table VIII.Area of GAS usage
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between 0.715 and 0.575. Factor three, labeled auditing, consisted of five items withloading between 0.867 and 0.557. Factor four, labeled cost and resources (GASimplementation), consisted of four items with loading between 0.769 and 0.591.
Factor five labeled cost and resources (audit engagement), consisted of two items withloading between 0.804 and 0.801. Factor six, labeled technological and IT availability,consisted of five items with loading between 0.804 and 0.544. Factor seven, labeled personalexperience, consisted of two items with loading between 0.776 and 0.750. Factor eightlabeled personal knowledge, consisted of two items with loading between 0.808 and 0.641.Factor nine, labeled support from management, consisted of three items with loadingbetween 0.709 and 0.556.
Descriptive statistics computed after eliminating some of the variables in the factoranalysis are shown in Table XI. The questionnaire asked respondents how strongly thefactors influenced their decision to employ GAS. The importance of these factors wasmeasured by agreement through a Likert scale represented by 1-5, where 1 is stronglydisagree and 5 strongly agree. In this result, mean predictor variables suggest thatrespondents assigned a higher mean rating to technological and IT availability (4.05),auditing (3.87) and support from management (3.80). All other factors had mean valuesmore than 3 indicating that the respondents agreed that those factors influenced theirdecision to use GAS in auditing.
When asked about other factors that influenced the decision to employ GAS, one ofthe respondents replied:
We dont use GAS as much as I believe we could, essentially because a lack of understanding atthe strategic level, which (a) reduces the budget available for adequate training and (b) fails toprovide strategic direction for the effective and efficient use of GAS.
I used GAS [. . .]Never
(1)Rarely
(2)Sometimes
(3)Often
(4)Always
(5) Mean SD
To evaluate fraud risks 8 8 4 9 26 3.67 1.540To identify journal entries and otheradjustments to be tested 7 7 11 12 18 3.49 1.399To check accuracy of electronic files 14 7 15 9 10 2.89 1.436To re-perform procedures (i.e. aging ofaccount receivables, etc.) 14 9 14 10 8 2.80 1.393To select sample transactions fromkey electronic files 13 6 13 13 10 3.02 1.434To sort transactions with specificcharacteristics 12 6 18 12 7 2.93 1.317To test entire population instead ofsample 13 9 19 7 7 2.75 1.308To obtain evidence about controleffectiveness 13 11 11 8 12 2.91 1.482To evaluate inventory existence andcompleteness 15 10 11 9 10 2.80 1.471
Note: n 55Table IX.
Techniques used in GAS
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Com
pon
entb
12
34
56
78
9
Com
ple
xit
yof
clie
nt
sIT
env
iron
men
t0.
874
Dif
ficu
lty
toac
cess
clie
nt
sd
ata
0.86
0C
lien
tco
nce
rnab
out
dat
ase
curi
ty0.
858
Su
pp
ort
pro
vid
edb
ycl
ien
ts
ITp
erso
nn
el0.
839
Com
ple
xit
yof
clie
nt
sb
usi
nes
sen
vir
onm
ent
0.79
8S
tren
gth
ofcl
ien
ts
inte
rnal
con
trol
syst
ems
0.74
3C
lien
tb
usi
nes
ssi
ze0.
719
Eas
yto
mod
ify
and
up
gra
de
0.71
5D
eman
din
aud
itor
sp
rom
otio
np
olic
ies
0.71
3W
ork
load
son
mu
ltip
leau
dit
eng
agem
ent
0.69
0A
deq
uat
ete
chn
ical
sup
por
tfr
omv
end
ors
0.67
0T
he
sim
ilar
app
lica
tion
has
bee
nu
sed
by
oth
erau
dit
firm
0.66
0P
refe
rto
use
GA
Sra
ther
than
trad
itio
nal
aud
it0.
575
Th
eex
iste
nce
ofau
dit
met
hod
olog
yto
foll
ow0.
867
Lev
elof
aud
itri
sk0.
835
Pro
fess
ion
alau
dit
jud
gem
ent
0.78
2R
equ
irem
ent
by
aud
itin
gst
and
ard
s0.
736
Use
GA
Sre
gu
larl
yin
aud
itas
sig
nm
ent
0.55
7S
uffi
cien
tm
ain
tain
ing
cost
0.76
9S
uffi
cien
tim
ple
men
tin
gco
st0.
765
Eff
ecti
ve
and
adeq
uat
eE
XT
ER
NA
Ltr
ain
ing
for
staf
f0.
756
En
oug
hre
sou
rce
tou
seG
AS
0.59
1F
inan
cial
bu
dg
eton
aud
iten
gag
emen
t0.
804
Su
ffici
ent
tim
eal
loca
ted
toau
dit
assi
gn
men
t0.
801
Eff
ecti
ve
and
adeq
uat
eIN
TE
RN
AL
trai
nin
gfo
rst
aff
0.80
4E
ase
ofu
se0.
629
Av
aila
bil
ity
ofIT
aud
itex
per
tise
inor
gan
izat
ion
0.61
2U
p-t
o-d
ate
firm
sIC
Tin
fras
tru
ctu
re0.
556
Ad
equ
ate
and
suffi
cien
td
ocu
men
tati
onto
foll
ow0.
544
Ex
per
ien
cew
ith
larg
erau
dit
clie
nts
0.77
6E
xp
erie
nce
wit
hco
mp
ute
rize
dau
dit
ing
0.75
0U
nd
erst
and
ing
ofth
eap
pli
cati
on0.
808
ITk
now
led
ge
0.64
1F
ull
sup
por
tfr
omto
pm
anag
emen
t0.
709
Inst
ruct
edb
yth
em
anag
emen
tto
use
GA
S0.
651
Str
ong
ITsu
pp
ort
from
ITst
aff
0.55
6
Notes:
aR
otat
ion
con
ver
ged
in59
iter
atio
ns;
bco
mp
onen
t:1
cl
ien
t;2
jo
bre
lev
ance
;3
au
dit
ing
;4
co
stan
dre
sou
rces
(GA
Sim
ple
men
tati
on);
5
cost
and
reso
urc
es(a
ud
iten
gag
emen
t);
6
tech
nol
ogic
alan
dIT
avai
lab
ilit
y;7
p
erso
nal
exp
erie
nce
;8
per
son
alk
now
led
ge;
9
sup
por
tfr
omm
anag
emen
t;ex
trac
tion
met
hod
:pri
nci
pal
com
pon
ent
anal
ysi
s;ro
tati
onm
eth
od:V
arim
axw
ith
Kai
ser
nor
mal
izat
ion
Table X.Factor analysis for GASadoption rotatedcomponent matrixa
MAJ28,2
104
-
Str
ong
lyd
isag
ree
(1)
Dis
agre
e(2
)N
eutr
al(3
)A
gre
e(4
)S
tron
gly
agre
e(5
)M
ean
SD
Cli
ent
3.36
Com
ple
xit
yof
clie
nt
sIT
env
iron
men
t1
519
246
3.53
0.87
9D
iffi
cult
yto
acce
sscl
ien
ts
dat
a2
522
197
3.44
0.95
8C
lien
tco
nce
rnab
out
dat
ase
curi
ty3
622
213
3.27
0.93
2S
up
por
tp
rov
ided
by
clie
nt
sIT
per
son
nel
46
2814
33.
110.
936
Com
ple
xit
yof
clie
nt
sb
usi
nes
sen
vir
onm
ent
27
2517
43.
250.
907
Str
eng
thof
clie
nt
sin
tern
alco
ntr
olsy
stem
s1
622
215
3.42
0.87
5C
lien
tb
usi
nes
ssi
ze1
621
207
3.47
0.92
0Jo
bre
lev
ance
3.52
Eas
yto
mod
ify
and
up
gra
de
01
1824
123.
850.
780
Dem
and
inau
dit
ors
pro
mot
ion
pol
icie
s2
1129
94
3.04
0.90
2W
ork
load
son
mu
ltip
leau
dit
eng
agem
ent
010
1920
63.
400.
915
Ad
equ
ate
tech
nic
alsu
pp
ort
from
ven
dor
s0
220
1914
3.82
0.86
3T
he
sim
ilar
app
lica
tion
has
bee
nu
sed
by
oth
erau
dit
firm
s3
422
179
3.45
1.03
3
Pre
fer
tou
seG
AS
rath
erth
antr
adit
ion
alau
dit
08
1720
103.
580.
956
Au
dit
ing
3.87
Th
eex
iste
nce
ofau
dit
met
hod
olog
yto
foll
ow1
213
2118
3.96
0.94
2L
evel
ofau
dit
risk
12
730
154.
020.
850
Pro
fess
ion
alau
dit
jud
gem
ent
23
1225
133.
800.
989
Req
uir
emen
tb
yau
dit
ing
stan
dar
ds
29
1413
173.
621.
194
Use
GA
Sre
gu
larl
yin
aud
itas
sig
nm
ent
04
1125
153.
930.
879
Cos
tan
dre
sou
rces
(GA
Sim
ple
men
tati
on)
3.71
Su
ffici
ent
mai
nta
inin
gco
st0
021
277
3.75
0.67
3S
uffi
cien
tim
ple
men
tin
gco
st0
021
286
3.73
0.65
1E
ffec
tiv
ean
dad
equ
ate
EX
TE
RN
AL
trai
nin
gfo
rst
aff
25
2218
83.
450.
978
En
oug
hre
sou
rce
tou
seG
AS
01
1332
93.
890.
685
Cos
tan
dre
sou
rces
(au
dit
eng
agem
ent)
3.64
(continued
)
Table XI.Factors that influence
the use of GAS
Utilisationof GAS by
auditors
105
-
Str
ong
lyd
isag
ree
(1)
Dis
agre
e(2
)N
eutr
al(3
)A
gre
e(4
)S
tron
gly
agre
e(5
)M
ean
SD
Fin
anci
alb
ud
get
onau
dit
eng
agem
ent
05
1824
83.
640.
847
Su
ffici
ent
tim
eal
loca
ted
toau
dit
assi
gn
men
t0
616
258
3.64
0.86
8T
ech
nol
ogic
alan
dit
avai
lab
ilit
y4.
05E
ffec
tiv
ean
dad
equ
ate
INT
ER
NA
Ltr
ain
ing
for
staf
f0
09
2620
4.20
0.70
4E
ase
ofu
se0
27
2026
4.27
0.82
7A
vai
lab
ilit
yof
ITau
dit
exp
erti
sein
org
aniz
atio
n2
014
2613
3.87
0.90
4U
p-t
o-d
ate
firm
sIC
Tin
fras
tru
ctu
re0
314
2414
3.89
0.85
4A
deq
uat
ean
dsu
ffici
ent
doc
um
enta
tion
tofo
llow
00
1427
144.
000.
720
Per
son
alex
per
ien
ce3.
70E
xp
erie
nce
wit
hla
rger
aud
itcl
ien
ts0
515
278
3.69
0.83
6E
xp
erie
nce
wit
hco
mp
ute
rize
dau
dit
ing
08
831
83.
710.
896
Per
son
alk
now
led
ge
3.71
Un
der
stan
din
gof
the
app
lica
tion
02
1527
113.
850.
780
ITk
now
led
ge
03
2226
43.
560.
714
Su
pp
ort
from
man
agem
ent
3.80
Fu
llsu
pp
ort
from
top
man
agem
ent
02
824
214.
160.
811
Inst
ruct
edb
yth
em
anag
emen
tto
use
GA
S2
824
129
3.33
1.03
7S
tron
gIT
sup
por
tfr
omIT
staf
f0
113
3110
3.91
0.70
1
Note:n
55
Table XI.
MAJ28,2
106
-
RQ3 findingsRespondents who indicated that their firm did not use GAS were asked to identifyfactors for not implementing GAS in auditing. Compared to the question for thosewho are using GAS, the items for each factor are presented in the opposite to thequestions posed to those respondents who adopted GAS. Responses to 41 items havebeen collected to predict auditor usage of GAS. Based on EFA, out of 41 items, eight ofthem have a factor loading below 0.50 and one item is cross-loaded on two differentfactors. There are also two factors which only have one item each. As one item is notstrong to support the item construct, both of the factors and items have been deletedfrom the analysis. Thus, a total of 11 items are deleted from this analysis. The resultsin Table XII show that all of the 30 items exhibit large factor loadings represent bysix factors.
The factors were labeled as:
(1) Organizational resource and support (factor loading between 0.681 and 0.791).
(2) Personal knowledge and experience (factor loading between 0.506 and 0.791).
(3) Technological (factor loading between 0.657 and 0.747).
(4) Audit profession (factor loading between 0.505 and 0.850).
(5) Client (factor loading between 0.555 and 0.886).
(6) Cost and resources (audit engagement) (factor loading between 0.612 and 0.642).
Descriptive statistics were computed after eliminating some of the variables in the factoranalysis are shows in Table XIII. The questionnaire asked respondents how strongly theyagreed with the factors for not implementing GAS in their firm. The degree of these factorswas measured by agreement through a Likert scale represented by 1-5, where 1 is stronglydisagree and 5 strongly agree. In this result, a mean value 3 and above show fair agreementtoward the factors for not implementing GAS, while mean value below 3 indicated lowerlevel of agreement of the factors.
Exploration using open-ended questions assisted in understanding the views of therespondents. One of the respondents mentioned that:
Our clients are generally low risk, small owner managed businesses which mostly havesimple accounting and control systems. For most there is no need to use GAS. There may be acouple of audits where it might be useful but it would not be practical or cost effective toprocure GAS and train staff for such a small proportion of our work.
Other auditors are resistant to the use of GAS because of their negative perception ofthe technology. One respondent reported:
We recently changed our audit packs and decided to stay with a paper based system mainlybecause reviews from peers indicate that the GAS are cumbersome and hard to use. Theadoption process is lengthy and the learning curve would increase costs to jobs byapproximately 100% in the first year.
Surprisingly, one of the auditors did not know that GAS existed mentioning that,No vendor has ever presented to us its use and effectiveness. It is not promoted.
One auditor recognized advantages of implementing GAS within their firm, butfailed to persuade the board to implement GAS. In term of cost, one respondentcalculates:
Utilisationof GAS by
auditors
107
-
Initial cost is expensive; cost analysis from another firm that has implemented GAS showa 25% cost increase during the first year, a 15% cost increase during the 2nd year andminimal benefits from year 3 onwards.
Thus, based on the above findings, a new adjusted research model has been developed.Instead of one group of factors that influence the use of GAS by external auditors, thereare another group of factors for not implementing GAS. Figure 2 shows the adjustedresearch model that contributes the GAS usage by external auditors.
This model contributes an alternative way of understanding the adoption of GASby external auditors. In real practices, the perceptions of auditors on the use of GAS aredifferent among those who are using GAS and those who are not using GAS. There arenine main factors that influence the use of GAS among the external auditors who use
Componentb
1 2 3 4 5 6
Inadequate maintaining cost 0.791Inadequate implementing cost 0.784Ineffective and inadequate INTERNAL training forstaff 0.783Less IT support from IT staff 0.757Less support from top management 0.737Unavailability of IT audit expertise in organization 0.735Ineffective and inadequate EXTERNAL training forstaff 0.712Insufficient resource to use GAS 0.681Insufficient knowledge to use GAS 0.791Unfamiliar with computerized auditing 0.746Less experience with larger audit clients 0.684Hard to understand of the application 0.665Prefer to use traditional audit rather than using GAS 0.623Difficult to become skillful using GAS 0.606Less of IT knowledge 0.566GAS is not regularly used in audit assignment 0.506Difficult to modify and upgrade 0.747No sufficient documentation to follow 0.723Difficult of use 0.657Professional audit judgment 0.850Level of audit risk 0.836The existence of audit methodology to follow 0.795Not required by auditing standards 0.621It is voluntary to use GAS 0.505Complexity of clients IT environment 0.886Complexity of clients business environment 0.870Strength of clients internal control systems 0.729Less support provided by clients IT personnel 0.555Workloads on multiple audit engagement 0.642Financial budget on audit engagement 0.612
Notes: aRotation converged in 13 iterations; bcomponent: 1 organizational resources and support;2 personal knowledge and experience; 3 Technological; 4 Auditing; 5 Client; 6 cost andresources (audit engagement); extraction method: principal component analysis; rotation method:Varimax with Kaiser normalization
Table XII.Factor analysis for notusing GAS rotatedcomponent matrixa
MAJ28,2
108
-
Str
ong
lyd
isag
ree
(1)
Dis
agre
e(2
)N
eutr
al(3
)A
gre
e(4
)S
tron
gly
agre
e(5
)M
ean
SD
Org
anis
atio
nal
reso
urc
esan
dsu
pp
ort
2.79
Inad
equ
ate
mai
nta
inin
gco
st19
2474
276
2.85
0.99
5In
adeq
uat
eim
ple
men
tin
gco
st19
2571
287
2.86
1.01
7In
effe
ctiv
ean
din
adeq
uat
eIN
TE
RN
AL
trai
nin
gfo
rst
aff
2439
6124
22.
610.
982
Les
sIT
sup
por
tfr
omIT
staf
f21
3772
164
2.63
0.94
4L
ess
sup
por
tfr
omto
pm
anag
emen
t21
2667
333
2.81
1.00
1U
nav
aila
bil
ity
ofIT
aud
itex
per
tise
inor
gan
izat
ion
1735
4339
163.
011.
176
Inef
fect
ive
and
inad
equ
ate
EX
TE
RN
AL
trai
nin
gfo
rst
aff
2141
7017
12.
570.
893
Insu
ffici
ent
reso
urc
eto
use
GA
S19
2551
4510
3.01
1.11
7P
erso
nal
kn
owle
dg
ean
dex
per
ien
ce3.
20In
suffi
cien
tk
now
led
ge
tou
seG
AS
1024
4562
93.
241.
015
Un
fam
ilia
rw
ith
com
pu
teri
zed
aud
itin
g9
2844
5217
3.27
1.07
9L
ess
exp
erie
nce
wit
hla
rger
aud
itcl
ien
ts11
3439
5115
3.17
1.11
4H
ard
tou
nd
erst
and
ofth
eap
pli
cati
on12
2786
223
2.85
0.84
1P
refe
rto
use
trad
itio
nal
aud
itra
ther
than
usi
ng
GA
S4
1036
7723
3.70
0.90
3D
iffi
cult
tob
ecom
esk
illf
ul
usi
ng
GA
S9
3080
265
2.92
0.86
3L
ess
ofIT
kn
owle
dg
e16
3771
251
2.72
0.89
1G
AS
isn
otre
gu
larl
yu
sed
inau
dit
assi
gn
men
t4
842
6729
3.73
0.92
6T
ech
nol
ogic
al2.
94D
iffi
cult
tom
odif
yan
du
pg
rad
e11
1697
242
2.93
0.78
3N
osu
ffici
ent
doc
um
enta
tion
tofo
llow
1018
9227
32.
970.
806
Dif
ficu
ltof
use
1122
8726
42.
930.
849
Au
dit
pro
fess
ion
3.53
Pro
fess
ion
alau
dit
jud
gm
ent
68
4772
173.
570.
907
Lev
elof
aud
itri
sk5
1361
5615
3.42
0.90
7T
he
exis
ten
ceof
aud
itm
eth
odol
ogy
tofo
llow
65
5464
213.
590.
913
Not
req
uir
edb
yau
dit
ing
stan
dar
ds
49
4766
243.
650.
913
Itis
vol
un
tary
tou
seG
AS
811
5854
193.
430.
986
Cli
ent
3.03
Com
ple
xit
yof
clie
nt
sIT
env
iron
men
t11
3162
3610
3.02
1.00
6C
omp
lex
ity
ofcl
ien
ts
bu
sin
ess
env
iron
men
t11
3367
318
2.95
0.96
8S
tren
gth
ofcl
ien
ts
inte
rnal
con
trol
syst
ems
926
7036
93.
070.
946
Les
ssu
pp
ort
pro
vid
edb
ycl
ien
ts
ITp
erso
nn
el9
2081
3010
3.08
0.91
6C
ost
and
reso
urc
es(a
ud
iten
gag
emen
t)3.
01W
ork
load
son
mu
ltip
leau
dit
eng
agem
ent
1618
8232
22.
910.
900
Fin
anci
alb
ud
get
onau
dit
eng
agem
ent
1516
5555
93.
181.
043
Note:n
150
Table XIII.Factors for not
implementing GAS
Utilisationof GAS by
auditors
109
-
GAS while only six significant factors influence the use of GAS by external auditorswho are not using GAS as shown in Figure 2.
Conclusion, limitations and future researchThis study found that GAS usage by external auditors remains relatively low. To obtainan understanding of the factors that influence the use of GAS, we obtained data bymeans of an online survey from 205 statutory auditors within the UK representingmid-tier and small auditing firms. Results indicate that the following are the factors mayincrease the likelihood that auditors will use GAS:
. Client includes all the aspects related to the auditee while the auditors areauditing the clients account. For example, it might include clients environment,internal controls, support and size.
. Job relevance includes aspects about an auditors perception of how the use ofGAS is important to their job and career progression.
. Auditing includes all the aspects that relate to the audit profession. It includesaudit methodology, auditing standards and professional judgment of auditor.
. Cost and resources (GAS implementation) includes all aspect which relates tothe cost and available resources to implement GAS.
. Cost and resources (audit engagement) includes all aspects which relate to thecost and available resources for a particular audit engagement.
. Technological and IT availability includes all aspects which are related totechnology and IT availability, including the human resource and IT infrastructure.
. Personal experience includes all aspects relating to an auditors experience.
. Personal knowledge includes all aspect that relate to an auditors knowledge.
. Support from management includes all aspect that relate to the support frommanagement for the use of GAS.
Figure 2.Adjusted research modelon GAS utilization
Audit Profession
UseGAS
Not UseGAS
OrganizationalResources &
Support
Personal Knowledgeand Experienc
Technological
Clients
Cost and Resources(Audit Engagement)
Client
Job Relevance
Auditing
Personal Experience
Personal Knowledge
Cost and Resources(GAS Implementation)
Cost and Resources(Audit Engagement)Technological and IT
Availability
Support fromManagement
GASUsage
MAJ28,2
110
-
The findings of this study also provide some reasons for the limited use of GAS. Thestudy suggests that the following are the reasons an external auditor might choose notto adopt GAS:
. Organizational resource and support includes all the aspects related to a firmsresources and the support from the management. Resources may include the costof implementation and maintaining of GAS and training of staff.
. Personal knowledge and experience includes all the aspects related toindividual auditors knowledge and experience in computerized auditing.
. Technological includes all the aspects related with the difficulty of using GAS.
. Auditing includes all the aspects related to the audit profession.
. Client includes all the aspects related to a clients environment, internal controlsystems and support.
. Cost and resources (audit engagement) includes all the aspects related tolimitations in the audit engagement.
Some responding auditors did not know that GAS existed. While some of them felt thatit was not worth implementing GAS because the overhead of adoption outweighed thebenefits given the small size of their clients or the limited number of clients they had.The findings reinforce and add to those of existing studies, especially in understandingthe adoption and non-usage of technology by professional auditors within small andmedium size of accounting firms.
This paper has proposed a consolidated set of factors which influence auditorsdecisions to adopt GAS. Although the findings are relevant primarily for SMEs, it isthis group that is most resistant to GAS adoption and for which further work should beundertaken. By better understanding the factors outlined in this paper, practitionersand vendors have the opportunity to adapt existing GAS offerings in order to addresssome of the misgivings of auditors who are resistant to adoption. Researchers andprofessional bodies will also be informed in order to develop appropriate professionaldevelopment in order to encourage GAS acceptance in the future.
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