Determining Factors and IT Adoption by Auditing Limited Liability Partnerships: Mediating Effect of IT Confidence
DOI:
https://doi.org/10.31436/ijema.v31i1.1072Keywords:
Auditing, IT, LLP, Practicing, Determining factorsAbstract
This research study examines the effect of information technology (IT) determining factors (IT awareness and IT proficiency) and IT adoption by auditing Limited Liability Partnerships (LLPs). This study also examines the mediating effect of IT confidence on the link between the determining factors and IT adoption by auditing LLPs. Data were gathered from 143 partners who are practicing chartered accountants registered as LLPs located in Kerala, India. The conceptual model is tested using structural equation modeling based on partial least squares. The findings confirm the direct effect of IT awareness, IT confidence on IT adoption as well as the mediating effects of IT confidence on the relationship between IT proficiency and IT adoption by auditing LLPs. The research study is performed only in the Indian LLPs perspective and future studies can be performed in other nations as well to generalize the findings. The findings of this research study can be used to guide practicing chartered accountants registered as LLPs, governing bodies of practicing auditors, and software developers while expanding the IT adoption by auditing LLPs. The determining factors of IT adoption have great potential for auditors of practicing firms for transforming from manual audits by adopting IT-enabled auditing tools to facilitate their audit services. The present research study gives valuable insight into the critical mediating role of IT proficiency and other IT variables as activating factors that impact auditing practice efficiency of auditing LLPs.
References
Ab Ghani, N.L., N. Mohd Ariffin, and A.R. Abdul Rahman. “The Measurement of Effective Internal Shariah Audit Function in Islamic Financial Institutions.” International Journal of Economics, Management, and Accounting 27, no. 1 (2019): 141-65.
Ab Wahid, R., and N. Peter Grigg. “A Draft Framework for Quality Management System Auditor Education: Findings from the Initial Stage of a Delphi Study.” The TQM Journal 33, no. 6 (2020): 1373-94.
Afroze, D., and A. Aulad. “Perception of Professional Accountants about the Application of Artificial Intelligence (AI) in Auditing Industry of Bangladesh.” Journal of Social Economics Research 7, no. 2 (2020): 51-61.
Al Ani, M.K., and H.G. Chong. “Interplay between Accounting Conservatism, Auditing Conservatism and Quality of Earnings in Oman.” International Journal of Economics, Management, and Accounting 29, no. 1 (2021): 167-205.
Al-Ansi, A., N.A. Ismail, N.A. Mareai Senan, A.K. Al-Swidi, H. Saleh Al-Dhaafri, M. Khaleel Faaeq, and A. Ali Homaid. “The Effect of IT Knowledge and IT Training on IT Utilization among Yemeni External Auditors: The Mediating Role of IT Importance.” International Journal of Economic Research 14, no. 16 (2017): 413-32.
Al-Hiyari, A., N. Al Said, and E. Hattab. “Factors that Influence the Use of Computer Assisted Audit Techniques (Caats) By Internal Auditors in Jordan.” Academy of Accounting and Financial Studies Journal 23, no. 3 (2019): 1-15.
Al-Natour, S., and I. Benbasat. “The Adoption and Use of IT Artifacts: A New Interaction-Centric Model for the Study of User-Artifact Relationships.” Journal of the Association for Information Systems 10, no. 9 (2009): 2.
Al-Olimat, N.H., and M.O. Al Shbail. “The Mediating Effect of External Audit Quality on the Relationship Between Corporate Governance and Creative Accounting.” International Journal of Financial Research 12, no. 1 (2021): 149-57.
Appari, Ajit, M. Eric Johnson, and Denise L. Anthony. “HIPAA Compliance: An Institutional Theory Perspective.” (2009): 1-9.
Au, C.H., and W.SL. Fung. “Integrating Knowledge Management into Information Security: From Audit to Practice.” International Journal of Knowledge Management (IJKM) 15, no. 1 (2019): 37-52.
Barclay, Donald, Christopher Higgins, and Ronald Thompson. The Partial Least Squares (PLS) Approach to Causal Modeling: Personal Computer Adoption and Use as an Illustration. AbeBooks, 1995.
Baron, R.M., and D.A. Kenny. “The Moderator–Mediator Variable Distinction in Social Psychological Research: Conceptual, Strategic, and Statistical Considerations.” Journal of Personality and Social Psychology 51, no. 6 (1986): 1173-82.
Benbasat, I., and R.W. Zmud. “The Identity Crisis Within the IS Discipline: Defining and Communicating the Discipline's Core Properties.” MIS Quarterly (2003): 183-94.
Bradford, M., D. Henderson, R.J. Baxter, and P. Navarro. “Using Generalized Audit Software to Detect Material Misstatements, Control Deficiencies and Fraud: How Financial and IT Auditors Perceive Net Audit Benefits.” Managerial Auditing Journal 35, no. 4 (2020): 521-47.
Brown, S.A., A.R. Dennis, and V. Venkatesh. “Predicting Collaboration Technology Use: Integrating Technology Adoption and Collaboration Research.” Journal of Management Information Systems 27, no. 2 (2010): 9-54.
Bryman, Alan. Social Research Methods. UK: Oxford University Press, 2016.
Byrnes, Paul Eric, Abdullah Al-Awadhi, Benita Gullvist, Helen Brown-Liburd, Ryan Teeter, J. Donald Warren, and Miklos Vasarhelyi. “Evolution of Auditing: From the Traditional Approach to the Future Audit.” In Continuous Auditing. Emerald Publishing Limited (2018): 285–97.
Chi, W., and C.?M.K. Pan. “Legal Liability, Audit Manpower Allocation, and Audit Quality: Evidence from Japan.” International Journal of Auditing 25, no. 2 (2021): 426–41.
Chin, W.W. “The Partial Least Squares Approach to Structural Equation Modeling.” Modern Methods for Business Research 295, no. 2 (1998): 295–336.
Christ, M.H., S.A. Emett, S.L. Summers, and D.A. Wood. “Prepare for Takeoff: Improving Asset Measurement and Audit Quality with Drone-Enabled Inventory Audit Procedures.” Review of Accounting Studies (2021): 1–21.
Collin, S.-O.Y., T. Tagesson, A. Andersson, J. Cato, and K. Hansson. “Explaining the Choice of Accounting Standards in Municipal Corporations: Positive Accounting Theory and Institutional Theory as Competitive or Concurrent Theories.” Critical Perspectives on Accounting 20, no. 2 (2009): 141–74.
Correia, T., I. Pedrosa, and C.J. Costa. “Open Source Software in Financial Auditing.” In Research Anthology on Usage and Development of Open Source Software, 504-18. IGI Global, 2021.
Cronbach, L.J. “Coefficient Alpha and the Internal Structure of Tests.” Psychometrika 16, no. 3 (1951): 297–334.
Currie, W. “Contextualising the IT Artefact: Towards a Wider Research Agenda for IS Using Institutional Theory.” Information Technology & People (2009): 63–77.
Davis, F.D. “Perceived Usefulness, Perceived Ease of Use, and User Acceptance of Information Technology.” MIS Quarterly (1989): 319–40.
DiMaggio, P.J., and W.W. Powell. “The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields (American Sociological Review, 1983).” Advances in Strategic Management 17 (2000): 143–66.
______, and W.W. Powell. “Introduction. The new Institutionalism in Organizational Analysis.” The New Institutionalism in Organizational Analysis (1991): 1-38.
Field, Andy. “Discovering Statistics using SPSS.” (3rd Edition). London, UK: SAGE Publications, 2009.
Fornell, C., and D.F. Larcker. “Structural Equation Models with Unobservable Variables and Measurement Error: Algebra and Statistics.” Journal of Marketing Research (JMR) (1981): 382-88.
Galaskiewicz, J., and S. Wasserman. “Mimetic Processes within An Interorganizational Field: An Empirical Test.” Administrative Science Quarterly (1989): 454-79.
Ghozali, I., and H. Latan. “Partial Least Square Concepts, Methods and Applications using the WarpPLS 5.0 program.” Universitas Diponegoro, Semarang (2014).
Gibbs, J.L., and K.L. Kraemer. “A Cross?Country Investigation of the Determinants of Scope of E-Commerce Use: An Institutional Approach.” Electronic Markets 14, no. 2 (2004): 124-37.
Hair, J.F., R.E. Anderson, B.J. Babin, and W.C. Black. “Multivariate Data Analysis: A Global Perspective.” Pearson, Upper Saddle River. (2010).
Hair Jr, Joseph F., G. Tomas M. Hult, M. Christian M. Ringle, and Marko Sarstedt. A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). Thousand Oaks, California: SAGE Publications, 2021.
Handoko, B.L., N. Ayuanda, and A.T. Marpaung. “Organizational, Social and Individual Aspect on Acceptance of Computerized Audit in Financial Audit Work.” Advances in Science, Technology and Engineering Systems Journal, 5, no. 3 (2020): 55-61.
______, Stefanus Ariyanto, and Dezie Leonarda Warganegara. “Perception of Financial Auditor on Usage of Computer Assisted Audit Techniques.” In 2018 3rd International Conference on Computational Intelligence and Applications (ICCIA), IEEE, (2018): 235-9.
Hashim, H.A., A. Mohamad Ariff, and M.R. Amrah. “Accounting Irregularities and Tax Aggressiveness.” International Journal of Economics, Management and Accounting 24, no. 1 (2016): 1-14.
Harris, M.K, and L.T. Williams. “Audit Quality Indicators: Perspectives from Non-Big Four Audit Firms and Small Company Audit Committees.” Advances in Accounting 50 (2020): 100485.
Henseler, J., C.M. Ringle, and M. Sarstedt. “A New Criterion for Assessing Discriminant Validity in Variance-Based Structural Equation Modeling.” Journal of the Academy of Marketing Science 43, no. 1 (2015): 115-35.
Hox, Joop J., and Hennie R. Boeije. “Data Collection, Primary Versus Secondary.” Encyclopedia of Social Management 1 (2005): 593-99.
Jaber, Raed Jameel, and Rami Mohammad Abu Wadi. “Auditors’ Usage of Computer-assisted Audit Techniques (CAATS): Challenges and Opportunities.” In Conference on e-Business, e-Services and e-Society, Springer, Cham, 365–75, 2018.
Markus, Keith A. “Principles and Practice of Structural Equation Modeling by Rex B. Kline.” (2012): 509–12.
Ku Bahador, K.M., A. Haider, and W.S. Wan Mohd Saman. “Assessing Information Technology Skills Using Maturity Scale Approach: A Case of Malaysian Accounting Firms.” Journal of Engineering and Applied Sciences 13, no. 4 (2018): 954-60.
Li, He, Jun Dai, Tatiana Gershberg, and Miklos A. Vasarhelyi. “Understanding Usage and Value of Audit Analytics for Internal Auditors: An Organizational Approach.” International Journal of Accounting Information Systems 28 (2018): 59-76.
Liang, Huigang, Nilesh Saraf, Qing Hu, and Yajiong Xue. “Assimilation of Enterprise Systems: The Effect of Institutional Pressures and the Mediating Role of Top Management.” MIS Quarterly (2007): 59–87.
Lim, Fung Xin. “Emerging Technologies to Detect Fraud in Audit Testing: A Perception of Malaysian Big Four Auditors.” (2021). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3877347
Lois, P., G. Drogalas, A. Karagiorgos, and K. Tsikalakis. “Internal Audits in the Digital Era: Opportunities Risks and Challenges.” EuroMed Journal of Business 15, no. 2 (2020): 205-17.
Lawrence, J. “The Factors that Influence Adoption and Usage Decision in SMEs: Evaluating Interpretive Case Study Research in Information Systems.” Electronic Journal of Business Research Methods 8, no. 1 (2010): 13–24.
Lowe, D.J., J.L. Bierstaker, D.J. Janvrin, and J.G. Jenkins. “Information Technology in an Audit Context: Have the Big 4 Lost their Advantage?” Journal of Information Systems 32, no. 1 (2018): 87-107.
MacKinnon, David P. Introduction to Statistical Mediation Analysis. New York: Routledge, 2012.
Maradona, A.F. “A Qualitative Exploration of Heuristics and Cognitive Biases in Auditor Judgements.” Accountability 9, no. 2 (2020): 94–112.
Mohamed, Intan Salwani, Nur Husniah Muhammad Muhayyidin, and Nabilah Rozzani. “Auditing and Data Analytics Via Computer Assisted Audit Techniques (CAATS) Determinants of Adoption Intention Among Auditors in Malaysia.” In Proceedings of the 3rd International Conference on Big Data and Internet of Things, 35-40. 2019.
Mohd Sanusi, Z., T. Mohd Iskandar, G.S. Monroe, and N. Mohd Saleh. “Effects of Goal Orientation, Self-Efficacy, and Task Complexity on the Audit Judgement Performance of Malaysian Auditors.” Accounting, Auditing & Accountability Journal 31, no. 1 (2018): 75-95.
Moradi, M., and E.R. Nia. “The Impact of Organizational Factors Based on Technology-Organization-Environment (TOE) Framework on Practical Levels and Characteristics of Audit Analysis and Internal Audit Performance.” European Journal of Business and Management Research 5, no. 4 (2020): 1-8.
Muda, I., and S.N. Landau. “The Implementation Theory of Conservative Accrual Accounting to the Quality of Accounting Information Systems.” Journal of Southwest Jiaotong University 54, no. 1 (2019). 1-12.
Mujalli, A.W., and A. Almgrashi. “A Conceptual Framework for Generalised Audit Software Adoption in Saudi Arabia by Government Internal Auditing Departments using an Integrated Institutional Theory-TOE Model.” In 2020 IEEE Asia-Pacific Conference on Computer Science and Data Engineering (CSDE), IEEE, 1-8. 2020.
Munoko, I., H.L. Brown-Liburd, and M. Vasarhelyi. “The Ethical Implications of Using Artificial Intelligence in Auditing.” Journal of Business Ethics 167, no. 2 (2020): 209-34.
Mustapha, M., and Y. Kwan Lee. “Sourcing Arrangement of Internal Audit Services: Does it Matter to the External Auditors?” International Journal of Business Continuity and Risk Management 10, no. 2-3 (2020): 99-111.
Nguyen, A.H., H.H Ha, and S.L. Nguyen. “Determinants of Information Technology Audit Quality: Evidence from Vietnam.” The Journal of Asian Finance, Economics, and Business 7, no. 4 (2020): 41-50.
Nunnally, Jum C. Psychometric Theory. 2nd Edition McGraw-Hill, 1978.
Nurul, A.F.A. “Effect of Competence and Effort of Auditors to Auditor Performance to the Use of Information Technology as Variable Mediation.” Russian Journal of Agricultural and Socio-Economic Sciences 78, no. 6 (2018): 233-43.
Otete, Albert Richards. “Adoption of Audit Software by Small and Medium-Sized Practices in East Africa.” European Journal of Accounting, Auditing and Finance Research 8, no. 9 (2020): 25-40.
Pan, Gary, and Poh-Sun Seow. “Preparing Accounting Graduates for Digital Revolution: A Critical Review of Information Technology Competencies and Skills Development.” Journal of Education for Business 91, no. 3 (2016): 166-175.
Pedrosa, I., C.J. Costa, and M. Aparicio. “Determinants Adoption of Computer-Assisted Auditing Tools (CAATs).” Cognition, Technology & Work 22, no. 3 (2020): 565-83.
Rogers, Everett M. Diffusion of Innovations. New York, NY: The Free Press, 1983.
Rozario, A.M., and M.A. Vasarhelyi. “How Robotic Process Automation is Transforming Accounting and Auditing.” The CPA Journal 88, no. 6 (2018): 46-9.
Saputra, Y., and H. Malau. “The Effect of Application of Audit Information Systems on Performance Auditors with the Implementation of Information Technology as Intervening Variables.” Jurnal Terapan Ilmu Manajemen dan Bisnis (JTIMB) 1, no. 1 (2018): 1-14.
Scott, W. Richard. “Institutions and Organizations.” (2nd Edition). Thousand Oaks, California: SAGE Publications, 2001.
Shaikh, H., M.U. Jokhio, Z. Ahmed Maher, S. Chandio, M. M Bin Abdullah, A. Raza, S. Salam, and A. Shah. “Beyond Traditional Audits: The Implications of Information Technology on Auditing.” International Journal of Engineering & Technology 7, no. 2.34 (2018): 5-11.
Sherer, S.A., C.D. Meyerhoefer, and L. Peng. “Applying Institutional Theory to the Adoption of Electronic Health Records in the US.” Information & Management 53, no. 5 (2016): 570-80.
Siew, E.-G., K. Rosli, and P.HP. Yeow. “Organizational and Environmental Influences in the Adoption of Computer-Assisted Audit Tools and Techniques (CAATTs) by Audit Firms in Malaysia.” International Journal of Accounting Information Systems 36 (2020): 100445.
Simar, L., and P.W. Wilson. “Estimation and Inference in Two-Stage, Semi-Parametric Models of Production Processes.” Journal of Econometrics 136, no. 1 (2007): 31-64.
Soni, R., R. Saluja, and S. Vardia. “Awareness and Adoption of Cloud Accounting Software: An Empirical Research.” IUP Journal of Accounting Research & Audit Practices 17, no. 2 (2018): 36-50.
Sudman, Seymour, and Norman M. Bradburn. Asking Questions: A Practical Guide to Questionnaire Design. Jossey-Bass, 1982.
Sulistyowati, Sri, Indri Kartika, Imam Setijawan, and Maya Indriastuti. “Bridging the Semantic Gap in Continuous Auditing Knowledge Representation.” In Conference on Complex, Intelligent, and Software Intensive Systems, Springer, Cham, 544-54. 2021.
Supriadi, T., S. Mulyani, E.M. Soepardi, and I. Farida. “Influence of Auditor Competency in Using Information Technology on the Success of E-Audit System Implementation.” EURASIA Journal of Mathematics, Science and Technology Education 15, no. 10 (2019): 1-13.
Tansil, A.Y.M., R. Widuri, A. Gui, and M.M. Ali. “Generalised Audit Software Use by External Auditor: An Empirical Examination from UTAUT.” Int. J. Innov. Creat. Change 5, no. 2 (2019): 887-908.
Thottoli, M.M. “Impact of Information Communication Technology Competency among Auditing Professionals.” Accounting Analysis Auditing 8, no. 2 (2021): 38-47.
______, and E.R. Ahmed. “Information technology and E-accounting: some determinants among SMEs.” Journal of Money and Business 2, no. 1 (2021): 1-15.
______, and K.V. Thomas. “Characteristics of Information Communication Technology and Audit Practices: Evidence from India.” VINE Journal of Information and Knowledge Management Systems 52, no. 4 (2020): 570-93.
______, K.V. Thomas, and E.R. Ahmed. “Qualitative Analysis on Information Communication Technology and Auditing Practices of Accounting Professionals.” Journal of Information and Computational Science 9, no. 9 (2019): 529-37.
Tiberius, V., and S. Hirth. “Impacts of Digitization on Auditing: A Delphi Study for Germany.” Journal of International Accounting, Auditing and Taxation 37 (2019): 100288.
Tsao, Grace. “What are the Factors that Influence the Adoption of Data Analytics and Artificial Intelligence in Auditing?” 2021. Honors Undergraduate Theses. https://stars.library.ucf.edu/honorstheses/975
Ugrin, J.C. “The Effect of System Characteristics, Stage of Adoption, and Experience on Institutional Explanations for ERP Systems Choice.” Accounting Horizons 23, no. 4 (2009): 365–89.
Umar, U.H., and J. Muhammad Kurawa. “Exploring the Reasons for the Low Level of Awareness and Knowledge of AAOIFI Accounting Standards in Nigeria.” Journal of Islamic Finance 10, no. 1 (2021): 1-14.
Vincent, N.E, A. Skjellum, and S. Medury. “Blockchain Architecture: A Design that Helps CPA Firms Leverage the Technology.” International Journal of Accounting Information Systems 38 (2020): 100466.
Widuri, Rindang, Bambang Leo Handoko, and Ilham Condro Prabowo. “Adoption of Information Technology in Public Accounting Firm.” In Proceedings of the 2019 4th International Conference on Big Data and Computing (2019): 198-202.
Downloads
Published
How to Cite
Issue
Section
