IT Adoption by Internal Auditors in Malaysian Public Sector: A Preliminary Finding

2.1. IT implementation

Auditors may conduct multiple audit works professionally and in a cost–effective manner with the use of IT. Government are endowing enormous sums of expenditure on IT as it would provide benefits to their functions and activities. In making decisions, majority of the users depend on IT without precisely understand how the processers operate. With regard to reducing the whole risks related to the computers usage, auditors need to obtain further actions to ensure that decision makers are provided with useful and reliable data. Among the techniques that can be implemented is by using the appropriate IT tools. The introduction of CAATTs in the past period is to assist auditors to find for instance several anomalies in the financial statement. CAATTs, according to Braun & Davis (2003), are any usage of IT as a tool in supporting the audit works. Auditors may perform various audit works which are associated to IT with the use of CAATTs.

There are a few researches to understand the IT adoption, particularly in CAATTs have been done. A study by Ahmi & Kent (2013) discovered two sets of factors that may enhance the possibility that auditors will adopt and not to adopt GAS. Among the factors are client, job relevance, auditing, cost and resources, technological and IT availability, personal experience, personal knowledge and support from management.

Janvrin et al. (2009a) examined the degree of using computer-related audit procedures and whether the use of computer-related audit procedures are influenced by control risk assessment and audit firm size. Another study by Janvrin et al. (2009b) discovered that performance expectancy and organizational and technical infrastructure support affects the possibility that auditors might employ CAATTs. They also recommend that to enhance the use of CAATTs, the audit firm may need to establish training courses and improve their computer support to boost the degree of ease related to using CAATTs among auditors.

Using the Unified Theory of Acceptance and Use of Technology (UTAUT), Mahzan & Lymer (2008) investigated the CAATTs adoption among internal auditors in the UK. They recommended a model of successful CAATTs’ adoption, encompassed of four elements including the factors that influence motivation, best practices of implementation, criteria for measuring performance and challenges that can become barriers to successful implementation. They observed that UK internal auditors were extensively used GAS and the factors influencing the GAS usage involve the capability of training employees on the GAS usage, compatibility of the software within the department and the ability of software to encounter data manipulation requirements.

Based on the above discussion, the research question develops for this paper is: What are the factors that influence the adoption of IT by internal auditors in Malaysian public sector?

2.2 Underpinning theories

The technology-organization-environment (TOE) framework is one of the theories that has been widely used in studying about IT adoption. According to Srivastava & Teo (2007), the TOE framework is a useful framework for understanding the adoption and performance of technological innovations. This study explored and mapped the TOE framework in examining the IT usage by internal auditors in public sector. The TOE framework was proposed by Tornatzky & Fleischer (1990) which identifies factors that influence the practice by which organization adopts and implements a technological innovation. According to David et al. (2010), technological factors describe both the internal and external technologies that related to the organisation, organisational factors denote to the existing resources in the organisation and environmental factors describe the features related to the industry within their business environment (David et al., 2010).

Previous researches that embedding TOE framework especially in the government sector are very limited. Following are among the related studies that has been conducted using TOE in government sector. Pudjianto et al. (2011) found that ICT infrastructure, top management support, regulatory environment, ICT expertise, and competitive environment are the factors that explained an e-government integration in Indonesia. Troshani et al. (2011) studied the adoption of Human Resources Information Systems (HRIS) in the public sector using TOE framework. For the technology context, they used better integration, accessibility, operational efficiency, adoption costs and inherent HRIS complexity to test on HRIS adoption. For organisational context, factors that they identified to influence HRIS adoption are management commitment and human capability while for environmental context, factors that have a significant impact on HRIS adoption success are regulatory compliance and successful adoption stories.

3.1. IT adoption framework

Based on the literature that has been discussed in the previous section, the TOE framework as shown in Figure 1 has been used as a leading model for this study. A number of items have been identified to facilitate with the current practice of the internal auditors in public sectors and their working environment based on the outcomes from the interview as well as the output from the pilot study.

See Full Size >

3.2. Respondents

An online and mail survey has been conducted to gather the data for this research. The total of 266 questionnaires were distributed to government organisation that have internal audit unit (IAU) by invitation through email for auditors who had publicly available email addresses and was sent through normal mail with return envelope for the others. After 100 days, 98 questionnaires were filled completely which represent a 36.84 percent response rate.

4.1. Demographic results

Table 1 shows the profile of the respondents where the number of respondents is equal between genders. Most of the respondents are categories between 35-44 years old which represent 38 percent of the total respondents. Thirty percent of the respondents are between 25-34 years old and 20 percent are between 45-54 years old. Eleven of the respondents are 55 years old and above and only one respondent indicates that he/she is between 18-24 years old. Most of the respondents are the head of IAU which represent 68 percent of the total respondents. The respondents were asked about the number of years they have been in their current position. Most of them (60 percent) have indicated that there are less than 5 years and 27 percent of the respondents are between 6-10 years in their current position.

When asked about their audit experience, 33 percent of respondents had less than six years of experience in auditing, 27 percent of them have between 6-10 years, and 18 percent have between 11-15 years in the field. The respondents were also asked about their experience in computerised auditing. Almost 40 percent of them had no experience at all, 38 percent of the respondents had experience less than 5 years in computerized auditing. Of all of the response received, 60 percent of them stated that they had adequate IT skills while 25 percent of them had good IT skills.

4.2. Factors that influence the use of IT

Respondents were asked about the factors that influence in the resolution to engage IT in auditing. The result of Cronbach’s alpha demonstrates an alpha of 0.953. The result for the Kaiser-Meyer-Olkin (KMO) and Bartlett's Test of Sphericity (BTOS) are shown in Table 2 which indicated that the data set satisfied the assumptions for factorability.

Meanwhile, a factor analysis was conducted to develop constructs that will help analyse the questionnaire responses. The analysis was done using principal component analysis and rotated using variance maximizing method with Kaiser Normalization. Eight components were generated after factor analysis has been conducted and all of the items had factor loading of more than 0.50. Figure 2 below shows the preliminary model on IT adoption by internal auditors in Malaysian public sector.

See Full Size >

Based on the above model, there are two variables under technological factors namely perceived usefulness and perceives benefits that influences IT adoption by internal auditors. Under organizational factors, organizational value and top management influence are the variables that tend to be the factors that influence the IT adoption. While under environmental factors, other auditors in other organization, external influence such as NAD and internal audit professional body, auditee and IT usage by organization’s external auditors and auditee are among the factors that affected the decision to adopt IT.