Modelling computer assisted audit techniques (CAATs) in enhancing the Indonesian public sector

The importance of information technology

The use of information technology (IT) has gained much attention in many organizations in recent years. This enlightened that computers and information systems become a necessity for business to complete their daily tasks. With the use of technology, businesses have evolved to collect and disclose their financial data. This helps organizations spend less time in paper-based presentation of their financial data and spend more time on their firms’ performance.²³ Consequently, many businesses are now attentive towards e-business (electronic business) and investing in complex IT software.²⁴ Various research emphasize explicitly PC-based audit support networks. For instance, Mansour²⁴ recorded the effect of innovation on review arranging in five huge audit firms and stated that innovation could be utilized to give customers direct internal controls that help the inspector recognize the defects in the client’s frameworks. He additionally found that innovation is helpful for breaking down the client’s business measures, decide, and survey the degree of controls, and prescribe tests that should be performed. Moreover, innovation ensures consistency with review principles and other review-related guidelines.

Bierstaker, Burnaby²⁵ portrayed the utilization of innovation on the review cycle by talking to IT experts from four of the five biggest US bookkeeping firms. Bierstaker, Burnaby²⁵ studies were graphic in nature and zeroed in on a particular audit application from one audit firm; consequently, the two examinations are not generalizable to the external auditor’s actual utilization of innovation. The examined auditors’ view of the significance of CAATs and the degree of CAATs use. They additionally analyzed how the apparent significance and degree of IT use vary by firm size and over the long run. They discovered firm size had been displayed to be critical in deciding CAATs utilization. Auditors from Big 4 firms (the leading players in the accountancy industry, with their services spanning advisory, audit and assurance, tax, risk consulting and management consulting, and capital and transaction management) were almost certain that more modest firms to utilize IT review applications. The investigation likewise discovered that the gap between IT use for Big 4 and Non-Big 4 firms has been shutting contrasted with the 2004 information. The Non-Big 4 firms’ CAATs utilization nearly looked like that of the Big 4 firms.²⁶ Earlier CAATs learns at the singular level utilized the Technology Acceptance Model (TAM) and Unified Theory of Acceptance, furthermore, Use of Technology (UTAUT) hypothesis. These hypotheses center around innovation trademark factors like performance expectancy, social impact, working with conditions, and perceived usefulness.^27,28

Studies have analyzed the aspects affecting the acceptance of CAATs. The previous studies on CAATs discover its acceptance from the specific level of auditors but not among the audit firms from the organizational perspective. The adoption of CAATs should initiate from an organization’s choice to obtain the technology, invest fundamentally, and offer the services for acceptance for individual auditor’s use. Hence, the firm’s degree of audit technology investment might adequately denote audit technology adoption instead of the individual auditor’s viewpoints.⁵

Just few studies have examined CAATs’ acceptance from the organizational point. Ismail and Abidin²⁹ described the outcomes of the descriptive analysis regarding IT knowledge and the significance of audit technology across Malaysian audit firms. Ramen, Jugurnath¹ postulated several aspects influencing the CAATs acceptance and analyzed the association and the major differences among the individual and organizational-standard aspects. A qualitative study was conducted to discuss the elements capable of influencing the CAATs and recognized Prescribed Accountancy Body (PAB) support as one of them. The auditor’s identification of the CAATs significance and the degree of CAATs usage was investigated by.²⁶ It was also inspected that in which ways the recognized cruciality and scope of IT usage differs from the size of the firm and time. The observation revealed that it was the firm’s size that is vital in considering CAATs use. The auditors from the Big 4 firms were most likely to employ the IT audit applications. The research also revealed that the gap between IT usage for the Big 4 and Non-Big 4 firms was filling, as per the former information. The earlier individual-level CAATs studies have utilized TAM and the UTAUT model. The theories concentrate on the technology features, such as performance expectations, societal impacts, service-providing situations, and recognized practicality.^29,30 The majority of the studies analyzed if the variables in the present UTAUT theoretical context might be implemented to CAATs acceptance in the exterior assessment settings.^5,31

UTAUT model

UTAUT is a basic theory that can be used to determine e-audit or electronic audit acceptance by individual auditors, which can impact an organization’s technological acceptance. Venkatesh, Morris²² initially proposed UTAUT, which contains four essential predictors of intention and usage: performance expectancy, effort expectancy, social influence, and facilitating condition. Furthermore, UTAUT is a theory that takes genders, age, and experiences into account.²² The use of information technology in the form of an application would be more readily accepted by its users, even if the UTAUT model assumes that auditors, particularly those who have received training on the use of information technology, will be more likely to use Computer Assisted Audit Techniques (CAATs) if it is simple to use.^14,32

E-Audit/CAATs

E-Audit is a technology-based information system that allows auditors to commit to their auditing tasks easily. The usage of E-Audit or CAATs has been widely used in the private sector in several nations. CAATs are used to combat and detect fraudulent activity and dangers.³³ The E-Audit system model can be applied through a specific electronic audit program and information technology tools. According to Liang, Lin,³⁴ the Internet’s massive rise has prompted the development of various modern information technologies, including object-oriented middleware’s, Internet security technology, and smart agents. Computer-Assisted Audit Techniques (CAATs) can be employed more successfully with information technology that emerges from a new approach to Electronic Data Processing (EDP) audits. Shaikh³⁵ proposed using CAATs, which is built on an electronic audit framework that incorporates most of the present capabilities of audit software but can be designed and distributed independently of the EDP auditors. CAATs, according to Zhao, Yen,⁶ is required to conduct ongoing audits in the electronic audit process. Because the auditor is a significant actor who has access to the party’s database being audited, the auditor’s capacity and competency are required.

Implementation of CAATs at BPK

The usage of e-audit was included in BPK’s strategic planning (Renstra) for 2011 to 2014 as the first step in establishing CAATs. The four major components of the e-audit implementation are BPK’s internal information system (e-BPK), BPK’s data warehouse (BPK data warehouse), BPK’s center of access and analysis (BPK Command Centre), and BPK’s internal information system (e-BPK). For BPK, e-audit can be utilized as an early warning system in the event of fraud in public finance management, which will eventually inspire accountability in managing state finances.³⁶ Auditors should keep pace electronically with their customers. Customers need help in introducing and overhauling their endeavor-wide registering stages. Respondents show that it takes a few years for an organization to totally move their old programming to big business-wide figuring stages regularly. In these circumstances, examiners should work with their customers to guarantee that all controls and execution measures expected to assess every business interaction are set up.²⁵ As examining programming is coordinated into the review interaction, evaluators will have more opportunities to resolve their customers’ perplexing issues in the worldwide commercial center. Customer, the board, should foster techniques that fuse the organization’s targets and objectives into execution estimates that can rapidly feature when an interaction is not performing up to norms. Evaluators can utilize CAATs in creating quantifiable targets and execution markers that enterprise-wide processing frameworks can serve to electronically screen.

Performance expectancy

How much somebody accepts that taking on a specific apparatus would assist him with accomplishing more prominent importance is referred to as Performance expectancy.^22,37 Execution hope insinuates the degrees to which an individual acknowledges that using the device can accomplish work execution gains.²² According to Jakšić³⁸ and Saygili,³⁹ commentators who acknowledge that the gathering of CAATs might overhaul their audit convenience and the idea of survey work ought to have uplifting objectives to take on the advancement. They found that the audit specialists’ dynamic communication was updated by electronic demonstration of accounting information.⁴⁰ Also, analysts’ conviction that using CAATs will chip away at coordinating audit preliminaries of controls and impressive testing will likely have significant standards to accept CAATs as shown by Bedard, Jackson⁴¹ and Loraas and Wolfe.⁴² Withstanding these benefits, the researcher acknowledges that analysts’ perspective on the support and productivity they desire to gain from using CAATs in their assessing space will quite affect the assumption to embrace and use them. Execution anticipation alludes to the degree to which an individual accepts that utilizing the device can support accomplish gains in work execution.²² Banker, Chang⁴⁰ found that utilizing CAATs in large review firms diminishes the review time required for working paper arrangement. They likewise tracked down that the review experts’ dynamic interaction was upgraded by the electronic show of bookkeeping data.⁴⁰ Besides, examiners’ conviction that utilizing CAATs will work on the productivity of leading review trial of controls and meaningful testing is probably going to have high aims to embrace CAATs as indicated by⁴¹ and Loraas and Wolfe.⁴² Withstanding these advantages, the specialist accepts that examiners’ impression of the convenience and usefulness they hope to acquire from utilizing CAATs in their reviewing area will certainly impact the expectation to take on and use them. In sum, the past research demonstrates that the effect of IT on the review cycle has been huge in numerous ways. This adds to the improvement of the audit interaction.^7,10

For example, an auditor might feel that utilizing CAATs will help him fulfill his audit time budget because it minimizes the number of hours spent on substantive testing and controlling, which will lead to an increase in audit time efficiency.⁵ Many studies show that the use of General Audit Software (GAS) by internal auditors,^6,43 external auditors,^24,44 and legal auditors⁴⁵ is influenced by performance expectancy. Based on the following studies, it is hypothesized that:

Effort expectancy

Effort expectancy refers to ‘the ease level related to the use of tools.²² Janvrin, Bierstaker⁵ illustrated how comfortable those auditors who have received training are using CAATs. Hoque, Saif⁵⁶ also found that users can accept an application if it is easy to use. Research by⁴⁵ showed that effort expectancy influences the use of CAATs by legal auditors. Venkatesh, Morris²² contend that effort expectancy is relied upon to be more notable in the beginning phases of another conduct when interaction issues address obstacles to survive and later become superseded by instrumentality concerns. Payne and Curtis¹⁴ note that since inspectors may settle on the choice to take on innovation and be answerable for carrying out the innovation, the work associated with innovation reception might be more notable to evaluators than to other IT experts. Hence, Payne and Curtis¹⁴ contend that work hope will be related to a social goal. Furthermore, a study by⁴³ revealed that the expectation of work also influences the use of CAATs by internal auditors. The second hypothesis presumed that:

Social Influence

Social influence can be defined as ‘the extent to which someone perceives the importance of others to use the new tool.²² In the context of an audit, this study expects the extent to which auditors perceive their direct managers’ support the use of CAATs can influence whether they adopt CAATs or not.⁵ The earlier examination has demonstrated that social influence affects the client’s aim to acknowledge and use an innovation.^45,46 In a review setting, we expect that the more noteworthy examiners see that their immediate administrators support CAATs utilization, the more certain inspectors are to take on CAATs. Loraas and Wolfe⁴² find that help from companions and support from managers decidedly impacts social aim. Hence, we foresee that social impact will positively influence CAATs use. Several studies have reported that the use of General Auditing Software (GAS) by external auditors is influenced by social influence.¹ Based on past studies, this study hypothesized that:

Facilitating condition

Facilitating condition is defined as ‘the extent to which people believe that the existing organizations have infrastructure and technique to support the use of tools.²² In the context of the Indonesian public sector of auditing, infrastructures may involve Kantor Akuntan Publik (KAP) providing services based on human resources of CAATs and the support of computers for staff such as special instructions, support center, hotline, and the use of guidance.⁴⁷ Many studies have demonstrated that the use of General Auditing Software by internal auditors,⁶ external auditors,^1,24,44 and legal auditors⁴⁸ are influenced by the facilitating condition. Therefore, based on the above arguments, this study hypothesized that:

The intention of usage

Individual motivation to do an activity is captured by intention.⁴⁹ Despite the fact that various circumstances influence how auditors want to utilize auditing support systems, the theory of planned behavior suggests that auditors who want to use the system properly will be more likely to do so.⁴⁹ Ajzen⁴⁹ showed that business intelligence (BI) is the most general indicator of conduct and is proposed to be a predecessor of genuine use. UTAUT’s goal to embrace and utilize CAATs is the reliant variable in the exploration model and is an element of execution anticipation, exertion, hope, social impact, and working with conditions.^50,51 This build puts the first ‘goal to utilize’ develop in the CAATs’ setting. Furthermore,⁵² found that purpose and external factors influence the optimal usage of supporting auditing systems. Thus, the following hypothesis presumed that:

Moderation model of CAATs acceptance

Additionally, Curtis and Payne¹¹ discovered that the budget period’s variables and the risk priorities of auditors substantially impact the intention of using CAATs in the UTAUT. The majority of the following research was conducted in technologically advanced states, whose assessment set-up might be distinct from the evolving states (Greenstein-Prosch et al., 2008). Such as the US setting, where the audit firms are parted among the Big 4, national, local, and regional firms. Whereas in Malaysia, apart from the Big 4 and middle-sized regional and national firms, most of the audit firms are individual administrators or contains fewer than five local-based associates.⁵³ Hence, the audit firms of Malaysia are likely to be partitioned into the ones focusing on the national or local extent.

Besides, the former studies have limitations since just the technologically featuring aspects were determined there, leaving the atmospheric and organizational impacts untouched. The Technology-Organization-Environment (TOE) context was utilized to remove those limitations, allowing the investigators to scrutinize multiple elements associated with technology, organizations, and the environment.⁵⁴ Tornatzky, Fleischer⁵⁴ established the TOE, an acceptance context at the firms-level. The TOE projected the significance of several relevant aspects in adopting novel technologies. The TOE context is largely used in the IT or IS works and is utilized in considering the acceptance characteristics in many IT frameworks. This context is also suitable for studying CAATs acceptance as it ranges over the technological models for involving the standpoints of organizations and the environment.⁵⁵ However, a query about the range over which the variables might impact CAATs acceptance rises here. Therefore, a CAATs acceptance paradigm was proposed to combine the technical aspects of Diffusion of Innovation (DOI) theory to involve the elements of organization and environment.

The profile of auditees has an impact on auditors’ acceptance of audits. Age, gender, and experience are the elements contained in the profile of an auditee. The term “age” refers to a person’s chronological age as measured in years. A Bachelor’s degree was found to have a direct, significant, and moderate effect on age on user behavior and adoption.^22,51,56 The sexual classifications of users, both males, and females are referred to as gender. Gender was found to substantially impact technology adoption in businesses in previous research by Venkatesh, Morris.²² Gender moderates the effect of believed benefits on behavioral intention. The number of years that an auditing firm has been in operation is referred to as experience. Previous behavior is influenced by previous experiences.⁴⁹ Evidence has revealed that prior familiarity or experience with an existing system can assist employees in adjusting to a new similar approach in the workplace.^57,58 Thus, the auditor’s information technology experience is considered in this study. Like Bierstaker, Janvrin⁴⁴ and Mahzan and Lymer,⁶ we discover proof supporting the thought that working with condition emphatically impacts the inward evaluators’ expectations to utilize and acknowledge CAATs. The outcome recommends that organizations ought to put sufficient cash in cutting edge foundation to relieve the hindrance of inspectors from tolerating and using CAATs. Besides, firms might expand CAATs use however growing new arrangements in regard to recruiting and advancement of examiners. These arrangements ought to devote more weight to inspector’s capacity to utilize information examination in their everyday review exercises.

Ethical approval

This study was approved by Universitas Islam Bandung Ethical Clearance Committee (Protocol Number 718/B.04/Bak-k/XII/2020) after due consultation, consent letter had been provided by the researchers to all respondents. Respondents had provided their consent without any force from anyone. Subsequently, to protect the rights and privacy of the respondents, all forms of data were acquired will remain confidential. Written, informed consent was obtained from participants.

Design and data collection techniques

A quantitative study using a survey method⁵⁹ has been utilized in this study. Questionnaires were distributed from June 2021 to September 2021 to the targeted respondents, BPK personnel, who worked as auditors in the Indonesian public sectors using an online survey. There were 3600 auditors located in the central and regional offices of Indonesia. The criteria used to select the location sites were based on those offices with a significant number of corruption cases and auditees. In addition, the selected sample is a BPK office that has auditors who already use CAATs. A total of 400 questionnaires model e-audit were distributed to the targeted respondents. From the 400 questionnaires, 225 surveys were returned and completed. This study combines both studies by Venkatesh, Morris²² on technology adoption and Dowling⁵² on the use of the system to help do audit works.

The UTAUT model usage from Venkatesh, Morris²² was adopted in this study because it combines several models that predict technology usage, including TAM,⁵⁰ planned behavior theory,^49,60 the idea of innovation diffusion,⁶¹ and the theory of social cognitive learning.^61,62 Furthermore, the UTAUT model has explained 70 percent of the intention variants to use technology and outperform each high-level model.²² The definition for each of the constructs is listed in Table 1. Table 1 is a summary table made by researchers based on several previous studies.

The respondents

The criteria for respondents in this study were auditors who work at the central and regional offices with a high number of auditees and a high level of corruption cases. BPK’s regional offices or representations include BPK’s Central Java, West Java, and East Java. Regional office with low cases and with a low number of auditees do not include the criteria of respondents. The final sample consists of 225 respondents who were the auditors working in the public sector of Indonesia. The distribution of respondents is depicted in Table 2, with the majority of the respondents being men (67.1 percent), aged 36 to 40 (30.2 percent), and having Bachelor’s educational backgrounds (54.7 percent).

Data analysis

This study has adopted Structural Equation Modelling (SEM) to examine the correlations between factors influencing intention and behavior using CAATs. Respondents’ profile (gender, age, and experience) has been used as a moderator in this study. The Partial Least Squares (PLS) method was used to analyze the data. The SmartPLS 3 was used to analyze the data for correlations between factors influencing intention and behavior of using CAATs.

Reliability and validity tests

The purpose of the reliability and validity tests was to determine whether the construct matched the structural model domain analysis. Cronbach Alpha (CA) was used to measure the reliability test, and the Fornell-Larcker measure was calculated from the composite reliability score (CR). The mean-variance extracted was used to conduct a validity test (AVE). The recommended score of the CA and CR for each construct is above 0.70,^63,64 and the AVE score of all factors should meet the recommended cutting-off point of 0.5 and above.⁶⁵ Table 3 shows the results of the CA, CR, and AVE tests. The value of CA and CR scores for each construct is more significant than 0.70, and it is within the allowable reliability range. All factors in the AVE satisfy the recommended cutting-off point of 0.5 and higher.

Multicollinearity test

The variance inflation factor (VIF) was used to test for multicollinearity problems. It is used to identifies the correlation between independent variables and the strength of the correlation. Because the value of VIF for the constructs is less than the maximum cutting-off point of 10, the structural study model is not negatively affected by the issue of collinearity.⁶⁶ The results are depicted in Table 3. As the results indicates, the value of variance inflation factor for all variables are higher than 1, which demonstrates the moderate correlation between variables.

Discriminant validity

The square root of the AVE score is used to determine the validity of this model. A factor must be higher than the factors’ cross-correlation.⁶³ Figure 1 shows the results of the discriminant validity test, which shows that discriminant validity is reliable because the AVE scores for those factors are higher than the square cross-correlation for those factors.

Figure 1. The results of discriminant validity test.

Structural model analysis

The structural model was carried out after testing the constructs for reliability test, validity, discriminant, and multicollinearity tests. Next, the hypotheses were tested using the Bootstrap Smart-PLS technique. As shown in Figure 2 and Table 4, the structural model results indicate the correlation between exogenous and endogenous factors using an algorithm of PLS.

Figure 2. Research structural model.

(Source: the results of the author’s analysis using the SmartPLS software).

Findings

Gender, education, and audit experience do not play a role in moderating the links between effort expectancy, performance expectancy, and social influence in facilitating behavior intention and usage intention (p>0.05). Interestingly, there is a favorable association between the intention of using CAATs and the act of using CAATs appropriately.⁶⁷

Performance expectancy is positively related to the intention to use CAATs, and facilitating conditions are positively associated with the appropriate use of CAATs. The coefficient determinant (R²) is used to assess the model quality test.⁶⁵ The estimated R² for correctly using CAATs is 0.447 (44.7 percent), indicating that exogenous factors are 0.447 (44.7 percent) in the endogenous variables of appropriately using CAATs. Meanwhile, the calculated R² for the intention of using CAATs is 0.507 (50.7 percent), indicating that exogenous factors are 0.507 (50.7 percent) in the endogenous variables of “Intention to use CAATs.” A good model is where the fit model test employs cross-validated redundancy (Q2), more significant than zero.^65,68 In sum, this model is fit or has a predictive interest based on the results of Q2AU, which is 0.377, and Q2BI, which is 0.353 (Table 4).

Underlying data

Figshare: Dataset of Questionnaire Result from the respondents of Modelling Computer Assisted Audit Techniques (CAATs) in Enhancing Indonesian Public Sector, https://doi.org/10.6084/m9.figshare.19642374.v2.⁶⁷

This project contains the following underlying data:

Extended data

Figshare: List of questions and descriptions of questionnaire of the Modelling Computer Assisted Audit Techniques (CAATs) in Enhancing Indonesian Public Sector, https://doi.org/10.6084/m9.figshare.19642437.v1.⁵⁹

This project contains the following extended data:

Figshare: The Respondent characteristics of the Modelling Computer Assisted Audit Techniques (CAATs) in Enhancing Indonesian Public Sector, https://doi.org/10.6084/m9.figshare.19642425.v2.⁷³

This project contains the following extended data:

Data are available under the terms of the Creative Commons Attribution 4.0 International license (CC-BY 4.0).