Adopting Generalized Audit Software - An Indonesian Perspective

Managerial Auditing Journal
Adopting generalized audit software: an Indonesian perspective

Rindang Widuri Brendan OConnell Prem W.S. Yapa
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Adopting generalized audit

software: an
Indonesian perspective
Rindang Widuri
Adopting
generalized
audit software
821
Department of Accounting and Finance, Bina Nusantara University,

Jakarta, Indonesia, and
Brendan OConnell and Prem W.S. Yapa

School of Accounting, RMIT University Melbourne, Australia
Abstract
Purpose This paper aims to identify key factors driving auditors adoption of Generalized Audit
Software (GAS) in a large developing country, Indonesia, through the lens of the technology,
organization and environment (TOE) framework.
Design/methodology/approach Results of this study are based on semi-structured in-depth
interviews conducted in Indonesia with audit firms of varying sizes.
Findings Key study findings included the identification of highly influential adoption factors,
especially environmental factors, such as availability of information technology-skilled auditors in the
local market, client needs and expectations and client size. This study has also identified factors, not
identified in previous research, as being influential including the importance of GAS availability in a
range of languages and the necessity of a supportive professional and regulatory environment.
Originality/value This study makes several contributions to the literature including that it
identifies new influential factors in the TOE framework. This framework has not been widely applied
in auditing research and looks beyond the individual perspective to that of the organization as a whole.
Moreover, the present study takes a developing country perspective and examines a range of audit
firms. In contrast, most studies to date in the area have taken a Western focus and have concentrated on
large audit firms. Additionally, this study provides an in-depth analysis through the use of
semi-structured interviews, whereas prior studies have relied on surveys.
Keywords Indonesia, Auditing, Generalized audit software,
Technology organization environment framework
Paper type Research paper
1. Introduction
The adoption of audit technology is seen to improve audit quality, and this is why its use
is mandated under US auditing standards (ODonnell and Schultz, 2003; Debreceny
et al., 2005). For example, to identify risk and fraud, the US Statement of Auditing
JEL classification M420
The authors would like to thank delegates and discussants at the following conferences for their
helpful comments about earlier versions of this paper: AFAANZ (2014) and the 5th Annual
Accounting Conference on Accounting and Finance, Singapore. The authors would like to
acknowledge the support provided by the School of Graduate Research at RMIT University for
funding this article through the Higher Degree by Publications Grant (HDRPG).
Managerial Auditing Journal

Vol. 31 No. 8/9, 2016
pp. 821-847
Emerald Group Publishing Limited
0268-6902
DOI 10.1108/MAJ-10-2015-1247
MAJ
31,8/9
822
Standards (SAS) No 316.52 indicates that the auditor needs to employ computer
assisted audit techniques to gather more extensive evidence about data contained in
significant accounts or electronic transaction files (AICPA, 2006). Willborn (1989)
argues that audit quality cannot be simply construed as compliance with the audit
standards. It also necessitates the use of innovative audit technology. Moreover, ASA
240 recommends the auditor use Generalized Audit Software (GAS) when conducting an
audit in an information technology (IT) environment. GAS is specialized software that
enables auditors to automate various audit tasks. It may be purchased from a vendor for
specific purposes such as audit client risk assessment or sampling or it may be
developed in-house by the firm itself to reflect a specific audit methodology[1].
The adoption of audit technology in developed countries has gained momentum. It is
interesting to investigate the developing country context and their adoption of audit
technology. This is of great importance, given the importance of high-quality audits to
ensuring the integrity of financial reporting, especially in the developing world where
the quality and transparency of financial reporting has often come under question.
Based on the above perspectives, the present study seeks to provide in-depth analysis
into one such country, Indonesia, the worlds fourth most populous country and a
country with a rapidly developing economy and capital market[2]. Specifically, the key
aim of this study is to examine external auditors adoption of GAS in Indonesia. To
achieve this objective, the research question is what are the influential factors in GAS
adoption in Indonesia? It should be highlighted that Indonesian audit standards
[standar profesional akuntan publik (SPAP)] recommend the use of audit software in the
conduct of audits (Audit Standard Statements No 59), but their use is not mandated.
Therefore, the motivation for Indonesian audit firms to increase their use of this
technology is not regulation-driven.
This study makes several important contributions to the literature. First, most
studies to date into the use of GAS have taken a Western country focus (Ahmi and Kent,
2013; Curtis and Payne, 2008). The extent to which these studies are relevant to
developing nations is questionable. For example, unlike the USA, GAS use is relatively
recent to Indonesian audit practices, and therefore this study provides an opportunity to
gain a comprehensive understanding of factors driving or inhibiting its implementation
at a time when the market is still relatively under-developed. Moreover, Indonesia
possesses a distinct culture and operating environment for auditors and businesses. For
example, the Indonesian economy is dominated by family-controlled businesses. Some
of these organizations are very large and are listed in the stock exchange; yet, few are
audited by a Big Four firm (Darmadi, 2012).
Second, many studies into audit technology or audit software focus on large audit
firms (Bedard et al., 2003, Curtis and Payne, 2008, Vendrzyk and Bagranoff, 2003),
whereas this study provides insights into GAS adoption in an external audit setting
across large, medium and small-sized enterprises. Third, this study uses the technology,
organization and environment (TOE) framework to examine the GAS adoption process
in an external audit firm context. This framework has not been widely applied in
auditing research, despite its capacity to holistically understand the technology
adoption process as influenced by a variety of internal and external forces. Specifically,
by using the TOE framework, the researcher can gain insights into the simultaneous
impact of technological, environmental, organizational and individual IT adoption
factors.
The key findings of this study were that factors such as compatibility with the
clients existing IT platform, fitness to task, auditors attitudes toward GAS, firm policy
and support and clients needs and expectations were highly influential in GAS
adoption. This study also identified several new influential adoption factors not
previously identified in the literature. These were language compatibility and regulator/
professional body support. It would seem that in a developing economy such as that of
Indonesia, these factors are key preconditions in adopting these innovations. Findings
also indicated that GAS adoption is heavily determined by a clients needs. As clients
grow in size and sophistication in a developing country, so does the need to use
innovations such as GAS to better service their needs. One final key finding was that
GAS adoption essentially follows a two-step process. First, there needs be suitable
environmental factors such as favorable client characteristics and a supportive
regulatory environment to facilitate the decision. Then, provided favorable
organizational and technology conditions are in place such as firm policy and support
and satisfactory IT skills, a decision to procure and apply GAS will follow.
The rest of this paper is structured as follows. In the following sections, previous
computer-assisted audit techniques (CAATs) or GAS research will be summarized.
Then, the theoretical framework, which is predicated on the TOE framework, is
presented. The research method used follows along with the key findings with reference
to prior literature and theory. The paper concludes with some overall observations
together with the study limitations and avenues for further research.
2. Prior research and theoretical framework
2.1 Computer-assisted audit techniques and Generalized Audit Software
In their study, Braun and Davis (2003) defined CAATs as any use of technology to
assist in the completion of an audit (p. 726). Its use includes word processing, electronic
spreadsheets and expert systems (Debreceny et al., 2005; Ismail and Abidin, 2009). Many
researchers have documented the type of CAATs (Braun and Davis, 2003; Ching-Wen
and Wang, 2011) including GAS which is the focus of the present study, is a class of
CAATs enabling the auditor to extract data, query, manipulate, summarize and analyze
tasks (Boritz, 2002; Debreceny et al., 2005; Ahmi and Kent, 2013). GAS has been
represented by commercially available software, ACL[3] and/or IDEA[4]. Larger audit
firms have developed their own applications internally (Bierstaker et al., 2001)[5].
2.2 Technology adoption and acceptance
Technology adoption and information systems (IS) literature is a prevalent area of
research. Technology acceptance theories assert that user acceptance of a new IS is
primarily a function of user intention (Davis, 1989). Two widely applied theories/models
are the Technology Acceptance Model (TAM) (Davis, 1989; Davis et al., 1989) and the
Unified Theory of Acceptance and Use of Technology (UTAUT) Model (Venkatesh
et al., 2003).
TAM was first developed by Davis (1989). It provides an explanation of the
determinants of computer acceptance and user behavior. In their study, Davis et al.
(1989) posited that TAM identifies the general determinants of individual technology
acceptance, namely, attitude and perceived usefulness. It also describes the effects of
external variables on intention to use such as perceived usefulness and perceived ease of
use. The emphasis of these models is on an individuals use of technology.
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UTAUT was developed by Venkatesh et al. (2003) to describe factors explaining IT

acceptance by an individual. The UTAUT was formulated through identifying four
constructs that determine individual acceptance and usage behavior: performance
expectancy, effort expectancy, social influence and facilitating conditions. The key
moderators in the model are gender, age, voluntary use and experience.
These theories have been applied across various nations including the USA (Adams
et al., 1992; Agarwal and Prasad, 1999; Venkatesh and Davis, 2000; Venkatesh et al.,
2003) and Hong Kong (Hu et al., 1999; Hong et al., 2002; Chau and Hu, 2001).
2.3 Computer-assisted audit techniques/Generalized Audit Software acceptance studies
There have been a number of CAATs/GAS acceptance and adoption-related studies in
the IS field. Most of these previous studies used the UTAUT (Janvrin et al., 2008b) and
TAM models (Bedard et al., 2003; Curtis and Payne, 2008).
These prior studies have tended to focus on developed countries. For example,
ODonnell and Schultz (2003) and Janvrin et al. (2008) studied US audit firms. Dowling
and Leech (2007) examined Australia. Debreceny et al. (2005) studied Singaporean firms.
Turning to audit methodology, ODonnell and Schultz (2003) argued that sound audit
methodology is based on a comprehensive, up-to-date understanding of the clients
business and industry that is acquired through a thorough analysis of the management
of external and internal operations. For example, one audit firm may use an approach
that focuses on risk-based auditing, whereas another may emphasize a transaction
cycle-based approach. There are many studies about the application of specific audit
methodologies, for example (Eilifsen et al., 2001; Curtis and Turley, 2007; Robson et al.,
2007). Previous studies such as ODonnell and Schultz (2003) found the choice of audit
methodology encourages firms to adjust their support software and assert that each
approach has its own emphasis on different aspects of the audit. An example is the way
audit evidence is organized, and this will be different between risk-based and
transaction cycle-based approaches. The risk-based approach tends to organize the
clients information based around business activities, whereas the transaction
cycle-based approach arranges the client information based on account classification.
While previous studies have used these theories (Bedard et al., 2003; Curtis and
Payne, 2008; Janvrin et al., 2008b) to predict the acceptance of GAS, Dowling (2009) and
Ahmi and Kent (2013) developed models to identify factors influencing GAS adoption
and acceptance. A study by Dowling (2009) introduced a theoretical model of factors
influencing appropriate audit support system use and showed that attitude, perceived
normative pressure and self-efficacy can be used to predict intention to use an audit
support system. Moreover, intention to use and external control predicted usage of an
audit support system. In their study, Ahmi and Kent (2013) identified nine GAS
adoption factors including client and job relevance, cost and resources of
implementation, technological and IT availability and personal knowledge and
management support. Interestingly, they found that GAS usage by UK external
auditors remained relatively low and attributed this to factors such as lack of
organizational resources, support and cost.
Another characteristic of much prior GAS research is the focus on the individual
rather than the organization. Previous studies on GAS acceptance and usage (Bedard
et al., 2003; Curtis and Payne, 2008; Janvrin et al., 2008b) stressed the importance of
individual acceptance factors. As previously noted, the present study adds to this
literature by providing evidence about the adoption factors at the organizational rather
than the individual level through use of the TOE framework.
In terms of studies into GAS usage in Indonesia, there is only one known prior study.
Widuri et al. (2014) identified that all Big Four firms in Indonesia used commercially
available audit software such as ACL or IDEA in addition to their own internally
developed audit software. The Big Four firms mainly relied on this internally developed
software to evaluate fraud risk, to test journal entries and other adjustments, to select
sample transactions for testing and to obtain evidence about the effectiveness of internal
controls. In the case of mid-tier firms, slightly less than half (43 per cent) of mid-tier firms
studied used commercially available software with only 20 per cent of these developing
their own internal audit software. Turning to small audit firms, they found that only 13
per cent of their sample indicated that they used commercially available audit software
with none of them using internally developed audit software.
In sum, prior related research has mainly examined individual rather than
organizational adoption factors and has studied developed countries. It has also relied
predominately on TAM as its guiding theoretical model. In contrast, the present study
uses the TOE framework and is focused on GAS adoption at an organizational level
within a major developing nation. The TOE framework will now be summarized.
2.4 Technology, organization and environment framework
Previous studies such as Bedard et al. (2003), Curtis and Payne (2008) and Janvrin et al.
(2008b) used UTAUT or TAM as their basis. UTAUT and TAM have been used to
identify individual acceptance of new IS. TOE looks beyond this individual perspective
to that of the organization as a whole. This approach contrasts with Bedard et al. (2003),
Curtis and Payne (2008), Janvrin et al. (2008b), Dowling (2009) and Kim et al. (2009) who
studied individual adoption factors.
The organizational focus on GAS adoption is useful because implementation is
generally, a whole-of-firm decision rather than the decision of one individual auditor.
GAS adoption after all represents a significant investment to the firm. This approach is
consistent with Sirois and Simunics (2010) model that found that the size of investment
in audit technology was a significant predictor of audit quality. In other words, the effort
of auditors in seeking to provide high-quality audits was not sufficient in itself to
guarantee a high-quality audit. This effort needs to be supported by large investment in
technology. In sum, it is apparent from the literature (Ahmi and Kent, 2013; Bedard et al.,
2003; Curtis and Payne, 2008; Dowling, 2009; Janvrin et al., 2008b) that there is a lack of
research into GAS adoption at an organizational level and across a range of audit firms.
The TOE framework was developed by Tornatzky and Fleischer (1990) and is
summarized in the following discussion. The TOE framework summarized in Figure 1
provides explanations about a range of potential influences on GAS adoption, namely,
technological, environmental, organizational and individual factors. The TOE
framework was developed by Tornatzky and Fleischer (1990) and is summarized in the
following discussion.
In brief, the environmental context is the arena in which a firm conducts its
business its industry, competitors, access to resources and dealings with government.
In an audit context, levels of support from professional bodies and regulators, vendors of
GAS, the clients size and industry can motivate GAS adoption. The organizational
context is described by Tornatzky and Fleischer (1990) as firm size and scope,
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Organization
External Task Environment
Formal and Informal Linking

Structures
Industry Characteriscs and

Market Structure
826
Communicaon Process
Technology support
Infrastructure
Size
Government Regulaon
Slack
Technological Innovation
Decision Making
Technology
Figure 1.
Technological,
organizational,
environmental (TOE)
framework
Availability
Characteriscs
Source: Adopted from Tornatzky and Fleischer (1990, p. 153)
centralization, formalization, complexity of its managerial structure, the quality of its human
resources and the amount of resources available internally. In an audit context, the relevant
factors are the firms size (Big Four, medium and small-sized firms), the intention to use
GAS, the IT skills of auditors and the IT capital budget. Finally, the technological
context describes the internal and external technologies relevant to the firm. This
includes existing technologies inside the firm and the available technologies in the
market. In an audit context, the firm may want to adopt GAS if it is compatible with
its clients existing IT platforms. Compatibility with audit tasks and ease of use are
also relevant considerations as a technological driver in the adoption of GAS.
Together, these various factors impact on the organizations technology innovation
decision-making.
The TOE framework was also selected because it provides explanation about
technological aspects such as the advancement of enterprise resource planning (ERP) or
accounting software that are commonly used by companies. This technological
advancement influences the way auditors conduct an audit. The technological
dimension provides explanation about the internal IT infrastructure that may or may
not support the adoption and use of GAS. These explanations are lacking in previous
studies that use UTAUT and TAM as a theoretical basis.
The TOE framework also provides insights into the organizational dimension and
includes considerations such as internal resources and the condition of audit firms, such
as the level of partner support for GAS adoption, human resources competency and the
budget to invest in GAS and auditor intentions toward GAS adoption and use. Other
theories such as UTAUT and TAM describe individual auditor attitudes and do not
focus on the organizational level of GAS adoption and use.
The importance of examining environmental dimensions is due to the audit firms
need to comply with auditing standards and relevant regulations in conducting an audit.
Moreover, previous studies were conducted in developed economies and show that
professional and regulatory guidance provides encouragement for audit firms to use
GAS (Ahmi and Kent, 2013; Bierstaker et al., 2001; Braun and Davis, 2003; Brooks and
Lanza, 2006; Debreceny et al., 2005; Janvrin et al., 2008b; Janvrin et al., 2009; Manson
et al., 1998; ODonnell and Schultz, 2003). However, it remains unclear whether
professional and regulatory guidance are considered important factors in GAS
adoption. Therefore, it is worthwhile to investigate the extent to which Government and
professional accountancy bodies provide support for audit firms to adopt and use GAS
in a developing country situation.
Tornatzky and Fleischer (1990) include the external environment in their model with
the assumption that companies need to set up a communication mechanism with
government, competitors, suppliers and consumers to reach the adoption decision. The
TOE framework has been applied extensively in various IS studies. For example, the
framework has been used in studies of electronic data interchange (EDI) adoption (Kuan
and Chau, 2001), e-business (Zhu et al., 2003b; Zhu and Kraemer, 2005), open source
systems (Chau and Tam, 1997; Dedrick and West, 2003; Ven and Verelst, 2012), ERP
(Ming-Ju and Woan-Yuh, 2008), electronic customer relationship management (Te-Ming
et al., 2005), e-government (Pudjianto and Hangjung, 2009) and aviation systems (Scott,
2007). Although specific factors used within the three contexts, i.e. technology,
organization and environment, varied across different studies, overall support for the
TOE framework was found.
In light of the prior research discussed above that highlights a lack of research into
GAS adoption in the developing world together with the summary of the TOE model
which enables one to study organizational influences on adoption, the key aim of this
study is to examine external auditors adoption of GAS in Indonesia. To achieve this
objective, the research question addressed is as follows:
RQ1. What are the influential factors in GAS adoption in Indonesia?
3. Method
Use of GAS has been introduced in most developed countries as part of their
contemporary auditing systems, but research on their effects in developing countries is
still in its infancy. This paucity of prior research has motivated the research questions
for this study. Prior to data collection, the researchers first developed a list of potential
themes that were drawn from the TOE literature. The list of codes was designed to assist
in content analysis of the interview data. However, the researchers also anticipated that
additional themes would emerge during the analysis of interviews and that some of the
potential themes may not be relevant to the Indonesian context. For example, an
observer is likely to find that the business regulatory environment within Indonesia is
different to Western systems. Therefore, researchers were careful not to allow the
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analysis to be biased by what prior studies had found, given that the Indonesian audit
environment may be quite different. The data from the interview sessions were then
analyzed for themes using the software NVivo 10.
Semi-structured interviews were carefully chosen to collect data as it was felt that
these would enable the level of in-depth probing necessary to identify the complex
decision-making behind a firms decision to adopt GAS. Given the Indonesian business
and auditing environment, interview questions were formulated using the TOE model
as a basis to ensure that each factor was addressed within the interview process. The
interview guide is reproduced in Appendix, and it shows the link between each TOE
factor (technology, organization and environment) with the various questions asked to
each interviewee. For example, interviewees were asked under the technology aspect of
the TEO model, Does the level of computer technology used in your clients financial
system affect your use of GAS? Interviewees were asked under the Environmental
aspect of the TOE Model, Please explain, how regulator(s) and professional bodies
provide support to use GAS (if any)?
Interviewees were obtained through a combination of liaison with a major
accounting body, personal connections of one of the researchers and snowballing.
Specifically, the researchers approached the major accounting body in Indonesia, the
Institut Akuntan Publik Indonesia (IAPI) (also known as the Indonesian Institute of
Certified Public Accountants). They agreed to provide introductions to key audit
employees at firms of differing sizes. These people were then contacted directly via
email and telephone to see whether they would participate in the study. Once they
agreed in writing, a formal interview was conducted at their place of employment.
Additional interviewees were identified through subsequent discussions with these
initial contacts.
Interviews were semi-structured in nature with interview questions derived from
prior research together with the TOE framework. The duration of interviews was 50 to
90 min, and all interviews were audio-recorded with the interviewees permission. The
interview transcripts were transcribed and subsequently sent to participants for
validation and clarification. The interviews were conducted in Bahasa (Indonesian
language) and then translated into English. Prior to conducting the interviews, the
researchers undertook pilot testing. Two external auditors and two academics were
invited to participate in pilot testing. The pilot testing took place at the participants
offices and the duration for each was 50 to 90 min. The results of the pilot test revealed
potential problems such as issues with the wording of some questions and ambiguities
of interpretation. These issues were corrected in a revised instrument that was
translated back into Bahasa.
Table I shows participants in the interviews came from a range of auditing firms of
all sizes (27 external auditors from 18 firms), a professional accounting body (one) and
regulators (six) giving a total of 34 interviewees[6]. This table also indicates that most
interviewees were male (88 per cent) reflecting the current dominance of the Indonesian
accounting profession (especially at senior levels) by males.
Table II shows the profile of audit firms that participated in this study and reveals
that there was a relatively even spread of firms by their size. Table II shows that 61
per cent of these firms had less than five partners reflecting the prevalence of small firms
in the Indonesian audit market. Interestingly, the majority of firms (61 per cent) were
internationally affiliated reflecting a preference for importing expertise and brand into
5
1
6
Regulators
PPAJP
OJK
Total
Professional accountancy body

IAPI
1
Total
1
Total participants
34
9
10
8
27
Total
Audit firms
The Big Four
Mid-tier
Small-sized
Total
Category
Number of
participants
Years of experience
0
3
1
1
30
3
1
4
8
10
8
26
0
9
5
2
0
9
2
2
2
6
1
1
13
1
1
2
4
5
11
Female Male 3-5 years 6-10 years 11-20 years
Gender of
participants
0
3
2
1
3
20 years
1
1
15
2
6
6
14
0
8
1
1
2
3
2
1
6
0
11
4
2
1
7
Title
Partner/Head of Manager/Head of
Senior
Institution
Department
Auditor/Staff
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Table I.
Demographics of
study participants
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Table II.
Profile of audit firms
Profile of audit firms
Big Four
Mid-tier
Small firm
Total
(%)
Number of partners
Less than five partners
5-9 partners
10-20 partners
Over 20 partners
Total
0
0
0
4
4
4
2
1
0
7
7
0
0
0
7
11
2
1
4
18
61
11
6
22
Number of auditors
10-20 auditors
21-50 auditors
Over 50 auditors
Total
0
0
4
4
3
0
4
7
6
1
0
7
9
1
8
18
50
6
44
International affiliation
Yes
No
Total
4
0
4
7
0
7
0
7
7
11
7
18
61
39
the local audit market. The participants were selected using the snowballing method.
The use of GAS is relatively new to audit practices in Indonesia, and the researchers
believe its use is a sensitive subject for most, especially auditors of mid-tier and
small-sized firms. It is also a sensitive subject in the context of IT capital budget
allocation, the level of GAS use in audit firms and the level of auditors IT skills. Hence,
the snowballing approach assisted the researchers to gain the trust of possible
participants because referral occurred in advance and was made with the assistance and
support of key people within the local profession.
4. Findings and discussion

Given the research questions, the present study aimed to provide in-depth analysis of
GAS usage within a South East Asian country, namely, Indonesia. In doing so, the key
objective of the study was to empirically investigate and analyze external auditors
adoption of GAS in the Indonesian auditing sector.
The findings of the study are presented under three adoption factors
technology-related factors, organization-related factors and environmental-related
factors. Table III displays the results of this analysis process across the various themes
(adoption factors) identified by participants. Table III also seeks to answer the following
research question:
RQ2. What are the factors that have led to increased adoption of GAS in Indonesia?
Those factors with the highest incidence of identification by interviewees identified by
50 per cent or more were categorized as being Highly Influential. Factors identified
by between 30 and 49 per cent of participants were categorized as being Somewhat
influential and factors identified by the less than 30 per cent were rated as being Less
Influential. This approach to reporting the frequency of identifying each factor is
consistent with Ven and Verelst (2012). The table is also broken down by audit firm size.
Category
Adoption factors
Technology
Compatibility with the audit

firms existing IT platform
Compatibility with the clients
existing IT platform
Fitness to task
GAS complexity
Information sharing capability
Language compatibility
User friendliness of software
Audit approach/methodology
Audit firm size
Auditors attitudes
Champion/auditors experience
with CAATs/GAS
Firm policy and support
IT capital budget
IT skills of auditor
IT support staff
Learning costs
Audit standards requirements or
expectations
Availability of IT-skilled
auditors in the Indonesian labor
market
Clients needs and expectations
Clients size and industry
Foreign investment expectations
within the country
Vendor of audit software
Regulators and/or professional
body levels of support and
requirements
Organization
Environment
The Big
4%
Mid-tiered
%
Small-sized
%
14
25
29
57
75
71
100
14
71
14
0
57
29
71
71
75
13
13
38
38
25
50
50
38
71
29
0
43
14
0
43
57
43
57
57
57
57
57
57
63
75
63
50
63
63
57
71
57
29
57
14
43
50
43
100
100
14
100
88
0
100
86
14
43
100
75
100
14
100
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Table III.
Notes: Factors rated by 50% or more of interviewees are considered highly influential; factors rated Influence of adoption
factors for GAS
by 30 to 49% of interviewees are considered somewhat influential; factors rated by 0 to 29% of
interviewees are considered less influential; (%) of interviewees from each firm category identifying classified according
to audit firm size
each factor is shown in the Table
4.1 Technology-related factors

Table III shows that of technology-related factors, Compatibility with clients existing IT
platform and Fitness to task, were considered to be highly influential adoption factors across
audit firms of all size. All participants agreed that compatibility with the clients IT platform
is a critical factor before GAS adoption will occur. Firms in the study used GAS if their clients
were using complex IT as the following quote from a Big Four firm stated:
All our clients use sophisticated ERP software, such as SAP, Oracle or Dynamic AS. If we do
not match our clients technology, we will have difficulty performing audits.
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Previous research suggests that auditors are required to use compatible technology with
their clients IS to efficiently and effectively test data for accuracy and to assure the
integrity of internal control systems. Smaller audit firms with less sophisticated clients
were less likely to use GAS, but they still recognized the importance of compatibility of
their technology with that of the IS of their client. Larger audit firms, where typically the
client used sophisticated IT systems, would adjust their technological competence
upwards to make their IT compatible, and vice versa.
Turning to Fitness to Task, this construct measures perceptions of the extent to
which GAS is perceived as useful to and consistent with the auditors work. Table III
shows that this factor was highly influential in GAS adoption. For example, a
participant from a small-sized firm stated that: The softwares features or menu are
useless because most of our clients are small service companies. Hence, this firm was
not applying GAS beyond simple, generic software such as MS Word and Excel.
Whereas a senior auditor from a Big Four firm provided an example of the GAS fitness
to his audit tasks: The template provided by the software really helps and is important
in the audit process. Similarly, a senior auditor from a mid-tier firm explained the
rationale for his firms use as follows:
Audit software provides a template of questions to diagnose the condition of the companies in
detail. Sometimes, the questions have never been thought about or anticipated by the auditor.
Therefore, it is easier to detect the condition of the company.
This finding about the importance of Fitness to Task is consistent with prior IT-related
research (Dedrick and West, 2003), but there has been little prior exploration of this
factor in audit-related research apart from Ahmi and Kent (2013) who found that job
relevance can motivate auditors to use GAS.
Language compatibility has not been studied as a potential adoption factor either in
prior studies using the TOE framework literature or in the auditing field itself. This is
probably due to most previous studies focusing on developed country settings where
English is often the first language. Table III shows that language compatibility was a
highly influential factor for small-sized firms and a somewhat influential factor for
mid-tier firms. This finding highlights a specific problem as epitomized by the following
quote from a partner in a small audit firm stated: Not all my auditing staff speak
English well. The terminology used in GAS is in English. A mid-tier audit firm partner
made a similar observation:
The barriers and obstacles to the use of audit software is language as the templates of
procedures are in English. Our auditors prefer audit software in the Indonesian language.
It follows that GAS software developed by foreign vendors in English is not accessible
for audit firms where many users are not likely to be highly proficient in English.
Clearly, this is a serious issue for medium and small-sized firms in Indonesia and
discourages adoption. In contrast, this was not a major factor for Big Four auditors who
believed that English did not cause a problem for them because they use it widely in
daily communication. As one audit manager from a Big Four firm said: Language is not
an issue because we are used to English, so it is not an obstacle.
4.2 Organization-related factors
Turning to the organization context, Table III shows that the following factors were
found to be influential in GAS adoption: audit approach/methodology, audit firm size,
auditors attitudes, having a champion experienced with GAS, firms policy and
support levels, IT capital budget, IT skills of auditors, IT support staff and learning
costs. Each of these factors is now discussed in turn.
As demonstrated in Table III, the findings of this study indicate that Big Four firms
consider audit methodology to be highly influential because GAS is used in a way that
ensures consistency of audit approach. A partner from the Big Four stated:
This audit software is developed to deliver the firms audit methodology. The methodology is
developed based on ISA [International Standards on Auditing] and to answer the needs of
rapidly developing business.
This views contrasts somewhat with mid-tier firms (25 per cent only identified this
factor as influential) and small-sized firms (none identified it). This finding suggests that
these firms are less attuned to the capacity of software to act as a vehicle for inculcating
a particular audit methodology into their firm.
Turning to Audit Firm Size, extensive literature has studied the adoption of
technology by larger firms (Dowling and Leech, 2007; Curtis and Payne, 2008). This
research finds that larger audit firms are leaders in technology adoption. Table III shows
that this factor was perceived as highly influential by medium-sized firms and
somewhat influential by small and Big Four firms. As noted by a partner in a mid-tier
firm: The size and category of the audit firm influences the use of GAS/CAATs because
they attract big companies with complicated IT systems. Another mid-tier firm partner
commented:
As a public accounting firm, our span of control increases with our size. The audit application
helps us control our work and we can proceed as planned.
The IT literature describes Auditors Attitudes as an important contributor to IT

adoption. Specifically, it suggests that intention to use specific IT is mainly driven by its
perceived usefulness and ease of use (Legris et al., 2003). Table III shows that most
participants perceived auditors attitudes as being highly influential in the adoption
decision. A senior auditor from a mid-tier firm said:
If the software is easy to use, auditors will be interested in using it. If its difficult at the
beginning, it will hinder the use consequently more effort will be needed for auditors to use it.
Interestingly, a partner from a mid-tier firm observed that younger staff tended to be
more receptive to the use of GAS. He explained:
Auditors who are open towards the implementation of GAS are the ones that are young and
technology-minded. They usually like it when they are given challenges and tasks that enable
them to explore their computer ability.
However, small-sized firms were more concerned about the benefits of GAS adoption. A
partner stated: Audit software is not easy to use however the benefits will encourage
the auditor to use it. In sum, the auditors attitude is driven by perceptions of ease of use,
benefits offered, age and being technology-minded. The first aspect, ease of use, is
consistent with TAM as proposed by Davis (1989). Age and technology-minded
perceptions have not been identified in prior auditing-related literature.
Prior literature indicates that the presence of a Champion or at least GAS experience
drives its adoption (Ven and Verelst, 2012; Dedrick and West, 2003). This champion
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can act as both GAS trainer and trouble-shooter. Table III shows that this factor is
important to Big Four firms. A senior auditor from the Big Four stated:
In our office we are provided with dedicated staff as a contact point if we experience difficulties
in using the audit software. The staff have access to global [audit firms name], and we receive
prompt support when we experience difficulties we cannot handle ourselves.
834
Findings indicate that there are not many obstacles for the Big Four to finding a
champion because these firms have the resources to invest in human capital. Indeed,
the presence of a champion is virtually assured within their system. For example, a
partner from a Big Four firm said:
From each division, they will send staff with good knowledge to Singapore to undergo training
for trainers. Then they will become a trainer and champion for their respective division.
While having such a person was also identified as worthwhile by small firms, they also
recognized that they often lack auditors with IT capability to develop, maintain and deal
with potential problems around GAS.
Firm Policy and Support was also seen as highly influential. Prior research indicates
auditors are more likely to use new technology once they are aware that it is strongly
supported by the managing partner (Curtis and Payne, 2008). IT research implies that IT
adoption is driven by the availability of company resources (Riemenschneider et al.,
2003); therefore, the existence of facilitating resources motivates GAS adoption and use.
The interviews in the present study indicated that small firms lack of financial and
human resources hinder their purchases of specific software and the internal
development of their own audit software. Furthermore, the absence of partner support in
audit software use is another factor that contributes to lack of adoption.
Partners or senior staff can support the use of GAS through various mechanisms
including providing training, facilities and encouragement. Previous research suggests
that encouragement from an audit partner or senior staff increases the likelihood of GAS
use (Dowling, 2009; Curtis and Payne, 2008; Dowling and Leech, 2007; Janvrin et al.,
2008b). Interviews with the Big Four and mid-tier firms confirmed that where GAS is
encouraged by audit partners, support will be forthcoming. However, the use of GAS in
small firms tends to be optional due to perceptions about high acquisition costs. An
audit partner from a small firm said:
Instead of buying something for showing off, I prefer adding people, enlarging the team. That
will have better results compared to buying an expensive thing.
The above statement is understandable given labor is cheaper in Indonesia compared

with that of developed countries. This finding confirms Manson et al. (1998) who argued
that the impact of economic considerations was an especially critical factor in the level
of IT implementation in audit firms in developing countries. Support in Big Four and
mid-tier firms can take various forms including the existence of a formal
technology-acquisition policy and the provision of structured training. An audit
manager from a Big Four firm said: Since working papers are no longer paper-based,
my firm uses audit software on a daily basis, and it is compulsory.
Support for GAS adoption in mid-tier firms varied. The majority of firms (11 of 18
participating firms) provided a laptop for each of their staff, but only 7 of 18 firms
indicated that they have a policy to encourage GAS use and an IT department to support
GAS-related work. A partner from a mid-tier firm said:
One of our IT policies is one person-one notebook. Over the past two years, we formed an IT
division. Things used to be handled by staff interested in IT but not IT experts. As time
passed, IT needs became increasingly complex and more problems occurred especially with
GAS. So we formed an IT division.
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However, another partner from a different mid-tier firm stated otherwise:
At our firm, there arent any internal regulations / guidance that describe the extent to which
auditors must use computers in the audit process.
IT or GAS adoption-related support and policy were found to be problematic in

small-sized firms. They tended to encourage auditors to use technology by providing
them with a personal computer or laptop and basic software such as Microsoft Office;
however, the support did not extend beyond this to GAS.
A strong IT capital budget enables audit firms to invest in GAS. Banker et al. (2002)
found that investment in IT increases productivity (Banker et al., 2002; Hsihui et al.,
2011). It is clear that the Big Four firms possess resources that enable them to invest
heavily in the latest IT and therefore arguably provide not only more efficient audits but
also higher quality audits (Janvrin et al., 2008a). Indeed, studies such as Francis et al.
(1999) and Lawrence et al. (2011) suggest that audits by Big Four firms are of higher
quality and enable a higher fee premium. In part, this is likely to be due to greater
investment in IT.
As shown in Table III, all groups described IT capital budgets as highly influential
on GAS adoption. However, the complexity of IT facilities depended on the size of the
audit firm and ranged from possessing an entire IT department to merely providing a
laptop, PC or software and internet access. In terms of GAS, larger audit firms tended to
develop their own auditing software applications, whereas smaller audit firms relied on
commercially available and less costly software. Some just used MS Office products.
The extent of investment by Big Four firms is reflected in the following comment:
Each staff member gets a notebook along with supporting audit software and audit
methodology. We also provide a technical database (knowledge management) containing
PSAK [Indonesian Accounting Standards] our policy, and audit instructions. The firms guide
prepared by our affiliate, is also provided in the technical database and can be accessed all the
time, be it online or offline.
The availability of IT support staff as a form of IT capital budget was also seen as
highly influential. The capacity to employ support staff to maintain and troubleshoot
the IT infrastructure in audit firms and ensure GAS is compatible with the existing IT
infrastructure and is functioning properly is considered vital. An increasingly complex
IT environment has driven Big Four and mid-tier firms to establish IT departments in
many cases. Two of the mid-tier firms outsourced this function to IT vendors. A partner
from a mid-tier firm said: To perform an IT review of SOEs (State-Owned Enterprises),
we call in IT consultants.
The level of IT Skills of Auditors was also highly influential. Previous studies assert
that high IT proficiency among auditors would lead to increased GAS use (Brazel et al.,
2010, Li et al., 2007). A recent study found the effect of IT knowledge and training
increased IT use (Al-Ansi et al., 2013). Table III shows that while participants agreed
that good IT skills are essential for increased GAS use, they recognized that IT skill
levels varied substantially among staff. Moreover, the effort taken by audit firms to
improve the IT skills of their employees also varied. For example, a manager from a Big
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Four firm said that extensive training was provided to familiarize auditors with their
firms IT environment:
For new software implementation, we usually send individuals who are good performers, who
have good IT, accounting and auditing knowledge to Singapore or Kuala Lumpur to learn new
software.
836
Interviewees from small-sized firms indicated that they do not always need to possess
high level IT skills because they do not tend to deal with complex systems or
organizations. These firms tended to provide less training to improve skills and relied on
the auditors existing IT skills.
An interesting finding in relation to IT skilled of auditors was that some interviewees
felt that there was a shortage of auditors with sufficient skills in the area and that this
could be partially due to the high average age of audit firm partners. A staff member
from PPAJP explained that 50 per cent of audit firms in Indonesia are sole practitioners
and more than 50 per cent of the partners are aged over 60 years. This observation was
consistent with Tuanakottas (2007) finding that 64.7 per cent of Indonesian public
accountants are aged over 50 years. This aging workforce may reflect in fewer IT-skilled
auditors as older accountants may be less willing to improve their IT skills than younger
ones.
The final organization-related factor was Learning Costs. The TOE literature argues
that the decision to adopt new technology is influenced by the compatibility of the new
technology with current technologies and by skills and tasks required (Dedrick and
West, 2003). When an organization wants to adopt a new technology requiring major
changes, it incurs conversion costs. Klemperer (1987) described learning/training costs
as one component of conversion costs. Findings indicate that participants argued that
GAS training is essential and that Big Four firms tend to send auditors to an external
training provider as well as arranging in-house training. A senior auditor from a Big
Four firm said:
The training in our place is quite structured. For example, if there is an update of software, all
levels (staff to partner) will get training. Higher levels will be trained in areas relevant to them
to reduce anxiety if there is a software version change. Here, we have staff dedicated to
allocating training schedules.
In contrast, small-sized firms did not schedule GAS training and preferred on the job
training. Small firms were selective about sending their auditors to an external training
provider due to a limited training budget:
IAPI provides Continuing Professional Development (CPD) related to the preparation of MS
Excel-based paper work. We familiarize ourselves with it through in-house training. We only
send senior staff or managers to participate in CPD.
4.3 Environmental-related factors

Moving now to the environmental context, Table III shows the following somewhat or
highly influential environmental factors: audit standards, requirements or expectations,
availability of IT-skilled auditors in the Indonesian labor market, clients needs and
expectations, clients size and industry, vendor of audit software and regulators and/or
professional bodies level of support and requirements. Each of these is now discussed in
turn.
In terms of Audit Standard Requirements or Expectations, previous studies indicate

that professional and regulatory guidance provides strong encouragement for audit
firms to use GAS (Debreceny et al., 2005; ODonnell and Schultz, 2003; Ahmi and Kent,
2013). For example, the American Institute of Certified Public Accounting (AICPA)
(2001) encourages auditors and audit firms to adopt IT and use specialists when
necessary. The Australian Auditing Standards Board also encourages auditor to use
GAS to identify unusual or unexpected revenue relationships or transactions (AASB,
2015). However, these studies are in a developed economy setting.
While Table III shows that the Big Four and medium-sized firms perceived audit
standards or expectations as being highly influential factors in GAS adoption, findings
of this study indicate that many participants were not well-informed about the level of
regulations governing GAS use in Indonesia. While the Big Four firms have developed
GAS in accordance with the ISA and SPAP, a participant from the Big Four stated: We
use GAS not because of audit standards, but for practical considerations. However, a
member of IAPI argued the use of GAS is stated in SPAP. Although Indonesian audit
standards identify audit software (Audit Standard Statements No 59), it only introduces
them and their use is not made mandatory. Not surprisingly, the audit firms, especially
small ones, felt that their adoption of GAS was not driven by standards:
We will use GAS if there is a need, not because audit standards require us to do so. To date,
there is neither audit standards nor the need for us to use GAS.
Table III indicates that Availability of IT skilled Auditors in the Indonesian Labour
Market was a key issue for all study participants. Medium-sized firms perceived this
factor as being highly influential, and Big Four and small-sized firms perceived it as
somewhat influential to GAS adoption. Participants raised the issue of lack of trained IT
staff. A partner from a Big Four firm said: Indonesian formal education is not capable
of producing ready-to-deploy human resources. The findings indicate auditors lack
knowledge of IT especially among recent graduates. Nine participants specified that
they critically needed graduates with a combined knowledge of accounting/auditing
and IT. They proposed accounting school graduates need to be specifically trained in
audit software use. For example, knowledge of EDI and audit software must be taught
to accounting students. Moreover, a partner from a mid-tier firm recommended that
GAS proficiency should be tested in Indonesian CPA exams.
Turning to Clients Needs and Expectations, Iacovou et al. (1995) identified client
expectations as being one of the critical factors contributing towards technology
adoption. Yet, participants in this study noted that their client was not concerned with
whether they used GAS. However, most participants agreed clients provided some
motivation for GAS use as stated by a partner from a small firm:
The external factor that encourages firms to use audit software, is expectation by the client and
includes meeting audit standards set by a regulator or standard setter through the client.
Staff from PPAJP said many public company audit clients preferred to use smaller audit
firms, such as mid-tier audit firms, due to the lower price they tended to charge when
compared to the Big Four. This statement is consistent with the evidence of Tuanakotta
(2007) who reported that mid-tier and small-sized firms dominated audit activities in
Indonesia. In fact, of the 339 listed companies at the time of that study, 187 companies
(55 per cent) were audited by non-Big Four firms. More recently, it was reported by
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AkuntanOnline (2013) that the Big Four audited just 15.17 per cent of companies in
Indonesia. This audit environment contrasts with that of countries such as the USA
where the markets for audits of listed companies is totally dominated by Big Four firms
(Francis and Yu, 2009). The lack of use of Big four firms for audits in Indonesia raises
potential audit quality concerns. As a partner from a Big Four firm said:
However, it needs to be regulated since a large complicated company cannot be audited by a
small firm as such would compromise the quality of the audit.
Table III indicates that Clients size and industry is a highly influential factor in GAS use.
Large clients and those from highly regulated industries are more likely to adopt high
levels of IT for financial reporting, and this encourages auditors to use computerized
audit tools when dealing with this type of client.
A senior auditor of a mid-tier firm said, The external factor that most influences the
use of audit software is the size and the complexity of the clients company. This
statement is supported by a partner from a Big Four firm who said:
The audit software that we currently use is based on our audit methodology be it for large, mid
or small-sized companies. They will get the same audit procedure. What differentiates them is
the involvement of IS auditors. For companies that are middle-sized and above, we will involve
an IS auditor, because input and outputs are heavily influenced and dependent on IT. Both IT
general control and IT application control need to be tested.
Interestingly, a partner from a small-sized firm that tended to audit small clients made
the following observation: What we need more of is how to develop the techniques or
software according to the clients needs irrespective of size. Regarding the clients
industry, most participants (21 of 34 participants) agreed industry characteristics are an
influencing factor. Participants indicated the industries that need to be audited by using
GAS are those with large data volumes or are from highly regulated industries.
A manager and a senior auditor from mid-tier firms said clients from public
companies and a referral client from firm affiliates also need to be audited using GAS.
Moreover, a partner from a mid-tier firm highlighted the focus on data integrity
emanating from a clients systems together with its internal controls:
In the audit process, the companies that are not fully computerized need GAS the most. This is
because the system that is not integrated has weak controls, and the probability of data error
is high. Moreover, the probability of data that is not uniform is also high due to the possibility
of data manipulation.
While the presence of Vendors of Audit Software was seen as somewhat influential,
interviewees noted that there are not any local vendors of GAS in Indonesia. This may
be due to the limited size of the Indonesian audit market at present. Moreover, audit
software is specific and segmented; hence, the Big Four firms have developed GAS
internally or purchased it from a foreign vendor. The foreign vendor tends to charge a
high price for the software that is a barrier to purchase for a small-sized firm. Moreover,
as previously noted the software is usually in English, and skills in this language are not
always available in Indonesian audit firms.
The final highly influential factor was Regulators and/or Professional Body Level of
Support and Requirements. Regulators or a professional body may create audit-related
regulations and standards. They may also offer training and advice. Findings of this
study delivered diverse responses from participants about these matters. For example,
a partner from a mid-tier firm said: There is a regulation that encourages the use of
audit software however it is only a request. A participant from a mid-tier said: A
regulation exists that urges the use of IT in audit firms. However, a participant from the
Big Four firms said: From the regulatory side, the government has not issued directives
to compel audit firms to use IT or audit software. A participant from a small firm also
gave the same response. In contrast, a staff member from the PPAJP argued that their
institution encourages the adoption and usage of GAS. For example, it accepts audit
firms working papers in softcopy as stated in the Law of Accountant Public No 5/2011,
whereas previously, a softcopy working paper was not accepted as formal audit
documentation.
In terms of levels of support from regulators or professional bodies, all participants
agreed that support is limited. Support provided by the professional bodies tended to be
in the form of training. However, a participant from a small-sized firm stated:
IAPI as a professional body does not provide CPD related to the use of GAS. Even if there is
training, it is conceptual and not hands-on.
A staff member from the PPAJP explained: To date we do not provide GAS training as
using it is not our main concern. A participant from the Big Four commented: In our
firm, CPD that is arranged by IAPI contributes a little towards staff professional
development.
Despite the comments from the PPAJP, external auditors perceived that regulators
and the professional body should take the initiative to provide support for GAS use.
Specifically, participants from mid-tier and small-sized firms expected regulators and
the professional accountancy bodies to provide affordable GAS that can be customized
to the needs of audit firms and their clients. A partner from a mid-tier firm said:
Regulators could provide the software. They buy the software license and the firms will
be the sub-licensee. Participants from mid-tier and small-sized firms also expected that
regulators or the professional accountancy bodies would provide GAS training and
subsidize training fees. A participant from a small-sized firm proposed:
Regulators have to provide a facility for CAATs. The facility could be in a form of training
relevant to GAS. We do not mind paying as long as it is not financially burdensome.
There were mixed views about the involvement of professional bodies in establishing
policies or guidelines around GAS usage. For example, a participant from a small-sized
firm said: The use of audit software has to be generated by need not regulator created
policy. However, a participant from the Big Four argued:
There is no regulation that imposes the use of audit software on firms and it does not need to
be regulated. However, it should be regulated that a large and complicated company cannot be
audited by a small firm since it compromises the quality of the audit.
When government agencies were asked about their views concerning the support that
auditors expected, they stated that they did not see it as their role to provide support for
GAS procurement or for the establishment of GAS-related policy. A staff member from
the PPAJP said, We encourage audit firms to improve the quality of their results, but we
do not compel them to use a specific tool. In terms of support for GAS-related training,
a staff member from OJK said:
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Training will only be given if a new regulation is released. Since we do not plan to release GAS
related regulations in the future, we do not provide training.
4.4 Prevalence of environmental-related factors

Table III highlights the significance influence of environmental factors on GAS
adoption with many items considered highly influential. Comments from interviews
also show that GAS adoption essentially follows a two-step process whereby first there
needs to be suitable environmental factors in place and next provided favorable
organizational and technology conditions occur, a decision to procure and apply GAS
will follow. The following quotes, in turn, from the Big Four, mid-tier and small firms
together with a regulator reflect this observation:
The point is, the client is a determining factor in the consideration of [GAS] utilization.
Other than clients, factors that significantly influence the firm to use audit software are audit
standards and our quality standards.
Client needs and the regulator determines the use of audit software.
Middle and small accounting firms in general, handle clients of less complexity therefore they
rarely use [GAS] because their clients have a simpler transaction process. For big firms there
is a tendency to use more extensive [GAS] in auditing because of need.
4.5 Synthesis of key findings

This study has found that while adoption of GAS has been strong for large and
medium-size audit firms within Indonesia, it has lagged for small firms. Using the TOE
framework, technology-related factors that were considered to be highly influential by
interviewees in the adoption of GAS were compatibility with the clients existing IT
platform and fitness to task. Language compatibility was highly influential for small
firms, given the lack of English skills more prevalent in this group.
Turning to organization-related factors, audit approach/methodology, firm size,
auditors attitudes, having a champion experienced with GAS, firms policy and support
levels, IT capital budget, IT skills of auditors, IT support staff and learning costs were
all highly influential. With regard to environment-related factors, audit standards
requirements, availability of IT skilled auditors, clients needs and expectations, client
size and industry, vendor availability and support and regulator/professional body
support were all somewhat or highly influential. Findings also indicate that GAS
adoption seems to follow a process whereby there first needs to be suitable
environmental factors in place and then provided favorable organizational and
technology conditions occur, a decision to adopt GAS will follow.
5. Conclusion
GAS use is relatively new to Indonesian audit practices. This study aimed to
develop an understanding of the GAS adoption decision in this nation and to answer
the research question: What are the influential factors in GAS adoption in
Indonesia? This study applied the TOE framework in addressing this research
question. Interviews of external auditors, government agencies and a professional
accountancy body identified 21 adoption factors that had an impact on the firms use
of GAS in the Indonesian context. Ten of these factors were rated as highly
influential by most participants including compatibility with the clients existing IT
platform, fitness to task, auditors attitudes toward GAS, firm policy and support
and clients needs and expectations.
Results of this study identify several new GAS adoption factors as being influential.
Specifically, language compatibility and regulator/professional body support are found
to be highly influential in GAS adoption; yet, these factors are not emphasized in prior
research. It would seem that in a developing economy such as that of Indonesia, audit
firms are more reliant on the encouragement and support of regulators and professional
bodies in adopting these innovations than might be the case in more highly developed
nations. While the TOE framework assumes that the influence of technological,
organizational and environmental factors on technology adoption is relatively even, our
findings indicate that environmental factors are identified as influential by a greater
proportion of interviewees than organizational and technological factors. In particular,
GAS adoption tends to be heavily determined by a clients needs. As clients grow in size
and sophistication in a developing country, so does the need to use innovations such as
GAS to better service their needs.
Another interesting finding is that GAS adoption essentially follows a two-step
process. First, there needs be suitable environmental factors such as favorable client
characteristics and a supportive regulatory environment to facilitate the decision. Then,
provided favorable organizational and technology conditions are in place such as firm
policy and support and satisfactory IT skills of auditors, a decision to procure and apply
GAS will follow.
This study makes two important contributions to the TOE literature. First, it has
identified new influential factors for GAS adoption that can be added into the TOE
framework. Second, findings show that environmental factors are essential precursors
to GAS adoption, whereas the TOE framework has tended to treat all three categories of
factors as equally influential.
This study has also added to the GAS literature. First, it studies GAS adoption within
a developing country. As the findings show, the factors driving this decision appear to
differ somewhat from the developed world which has been previously examined.
Second, it examines audit firms of varying size, whereas some prior research (Dowling
and Leech, 2007; Janvrin et al., 2009) has tended to emphasize large firms. Third, it has
used the TOE framework as opposed to the commonly applied TAM model.
There are several limitations to this study. First, this study focused on the adoption
of all types of GAS that are commercially available as well as internally developed
software. Second, the findings of this study are based on a limited number of
participants from one country. Third, one needs to recognize the inherent imperfections
of the interview process. Fourth, data may be subject to bias due to participants
adjusting their responses to reflect what they think is socially desirable or what they
think the researchers wish to hear. The findings of this study point to future
opportunities for research. Researchers could focus on commercially available GAS and
directly link the use of GAS to particular types of audits. It would also be interesting to
observe how GAS usage is evolving in light of new developments in technology. These
linkages could be compared with other countries and IT environments to enhance the
generalizability of findings.
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Notes
1. As noted by Ahmi and Kent (2013), GAS is used by auditors to analyze and audit either live
or extracted data from a wide range of applications (Debreceny et al., 2005). GAS is data
extraction and data analysis software, which is designed to perform specific audit routines
and statistical analysis. For example, it can browse, analyze, sort, summarize, stratify, sample
and apply calculations, conversions and other operations to audit a full set of accounting data,
as opposed to relying on sampling. While most audits now make use of electronic working
papers, the audit process itself is often undertaken without the automation offered by GAS.
Auditors still prefer to use traditional auditing procedures in forming an audit opinion based
upon a sample of accounting transactions instead of testing all the available data (89).
2. According to the World Bank (2015), the GDP of Indonesia averaged an annual growth rate of
between 5 and 6 per cent across the past 15 years. Its stock market is capitalized at a figure
that places it just below Singapore and Malaysia in size.
3. Audit Command Language (www.acl.com).
4. Interactive Data Extraction and Analysis (www.caseware.com/products/idea).
5. A more detailed description of ACL and IDEA can be found in Ching-Wen and Wang (2011).
6. It should be noted that there was more than one participant from some audit firms and
organizations. For example, when participants were interviewed, the researcher requested
that the partner to agree to IT staff and/or senior auditing staff responsible for maintaining
and using GAS to be interviewed. This process ensured that interview questions were
answered in a fully informed fashion.
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Corresponding author
Brendan OConnell can be contacted at: brendan.oconnell@rmit.edu.au
For instructions on how to order reprints of this article, please visit our website:
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Adopting
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audit software
Appendix
No.
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Questions
Please indicate:
Firm size
International affiliation
Years of experience in auditing
Number of partners
Number of auditors
What is your highest level of education?
Please describe your perceptions about GAS (and what you understand by this
term)
Please indicate software in which you are literate and rate your literacy (low,
moderate and highly literate).
Does a higher level of IT literacy lead to a higher level of GAS use?
What formal training have you received in the use of GAS?
How useful to you is GAS in conducting audits?
How easy to use do you find GAS?
Please explain, what factors encourage your firm to use GAS?
Technological aspect
Please describe IT infrastructure (hardware and software) provided by your
audit firm and how it helped them improve the quality of the audit process.
Does the level of computer technology used in your clients financial system
affect your use of GAS?
Do you believe that GAS is difficult to use and if so, is this impact on your level
of use of it?
Organizational aspect
Does the influence of senior people within your firm impact on your GAS usage?
To what extent do you think that the size of your accounting firm affects your
use of GAS?
Does your auditing firm encourage you and provide support for you to use GAS?
Please explain, how your firm provide encouragement and support?
Environmental aspect
Does the size of your client affect your use of GAS within the conduct of their
audit?
Please explain, how auditing standards provide encouragement for auditor to
use GAS (if any)?
Please explain, how regulator(s) and professional body provide support to use
GAS (if any)?
What do you see as being the limitations of GAS use at present, if any?
Are you planning to use GAS in the future?
847
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Managerial Auditing Journal

Adopting generalized audit software: an Indonesian perspective

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About Emerald www.emeraldinsight.com

Adopting generalized audit

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Department of Accounting and Finance, Bina Nusantara University,

Brendan OConnell and Prem W.S. Yapa

Managerial Auditing Journal

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UTAUT was developed by Venkatesh et al. (2003) to describe factors explaining IT

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External Task Environment

Formal and Informal Linking

Industry Characteriscs and

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Source: Adopted from Tornatzky and Fleischer (1990, p. 153)

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Professional accountancy body

Female Male 3-5 years 6-10 years 11-20 years

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Profile of audit firms

4. Findings and discussion

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Compatibility with the audit

4.1 Technology-related factors

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The IT literature describes Auditors Attitudes as an important contributor to IT

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The above statement is understandable given labor is cheaper in Indonesia compared

However, another partner from a different mid-tier firm stated otherwise:

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IT or GAS adoption-related support and policy were found to be problematic in

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4.3 Environmental-related factors

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In terms of Audit Standard Requirements or Expectations, previous studies indicate

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4.4 Prevalence of environmental-related factors

4.5 Synthesis of key findings

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communication industry, Journal of Computer Information Systems, Vol. 48 No. 3,

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