Brunel Business School Doctoral Symposium 28th & 29th March 2011 Paper 81

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Student Surname: AHMI

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Brunel Business School Doctoral Symposium 28th & 29th March 2011 Paper 81

THE USE OF GENERALISED AUDIT SOFTWARE (GAS) BY EXTERNAL

AUDITOR IN THE UK

Abstract
Generalised Audit Software (GAS) is the tool use by the auditors to perform various audit
tasks electronically. As most the accounting transaction are no more being presented
physically, the auditing for these data and records is considered as one of the most
challenging tasks for the auditors. But research found that there is little evidence that GAS
has extensively used by external auditors. This study will try to identify the usage of GAS
among the external auditors, the problems that they faced using GAS and the reason why the
auditor do or do not use GAS for auditing.

Keywords: Computerised Auditing, Generalised Audit Software, Computerised Assisted Audit

Tools and Techniques

Brunel Business School Doctoral Symposium 28th & 29th March 2011 Paper 81

INTRODUCTION

Computer Assisted Auditing Tools and Techniques (CAATTs) are the tools which were
previously and now still in greater use by auditors in performing audits. One of the most
commonly used CAATTs is GAS (Wehner and Jessup, 2005; Debreceny et al., 2005; Braun
and Davis, 2003). GAS is a software package which is used by auditors to analyse and audit
either live or extracted data from a wide range of applications (Debreceny et al. 2005). GAS
also includes several tools, including software that enables extraction of data from a clients
system and analysis of that data, statistical software and audit expert system (Debreceny et al.,
2005).

Two most of the popular GAS are Audit Command Language (ACL) and Interactive Data
Extraction and Analysis (IDEA) (Wehner and Jessup, 2005). While these software has been
claimed as most popular audit software for data extraction and data analysis, there are less
evidence shown that the usage has widely use by external auditors.

There are several research concentrate on GAS which particularly look into the adoption of its
usage. For example, Wehner and Jessup (2005), Debreceny et al. (2005) and Braun and Davis
(2003), While most of the researchers look into the adoption of GAS, only few papers
discussed about its usage by external auditors and only one of them specify the usage for
financial statement auditing. The rest are more specifically focus on internal auditors which
have the different objectives of audit. There are a very little issue raised about the reason why
the auditors not using GAS and the problems about the particular software. For example,
Debreceny et al. (2005) found that there is no evidence that GAS is use by external auditor in

Brunel Business School Doctoral Symposium 28th & 29th March 2011 Paper 81

their study. According to Janvrin et al. (2008), there is the lowest use of technology in audit
engagement especially in the testing phase and the GAS usage in some of the public
accounting firms also are still underutilised (Curtis and Payne, 2008).

RESEARCH OBJECTIVES AND RESEARCH QUESTIONS

The purpose of this study is to examine the use of GAS by external auditor. Data will be
collected among the external auditors in the United Kingdom (UK). The usage of the GAS,
the problems that they faced and the reason why the auditor use or not use GAS for auditing
will be identified. To understand this research in a better manner the following research
questions are posited.
1. What are the current usage of GAS and the perceptions of external auditor about GAS?
2. What are the factors that influence the use of GAS by external auditors?
3. Why there is very minimal use of GAS by external auditors?
4. How the use of GAS can impact the audit effectiveness and audit efficiency?
5. How the use of GAS can be improved in the financial statement auditing and what is the
best solution?
Based on the above objectives and research questions, the framework to test the use of GAS
will be developed.

THE FRAMEWORK

One of the theoretical frameworks that widely used by the latest technology adoption research
is Unified Theory of Acceptance and Use of Technology (UTAUT) by Venkatesh et al
(2003). They developed their own model after reviewing, comparing and testing eight

Brunel Business School Doctoral Symposium 28th & 29th March 2011 Paper 81

competing theories which are; the Technology Acceptance Model (TAM), Theory of
Reasoned Action (TRA), Theory of Planned Behaviour (TPB), the motivational model (MM),
Innovation Diffusion Theory (IDT), Model of Personal Computer Utilization (MPCU), the
Social Cognitive Theory (SCT) and a model combining TAM and TPB.

According to Venkatesh et al. (2003), there are four major individual elements that appeared
to be significantly impact the usage of technology. These elements are Performance
Expectancy (The degree to which an individual believes that using the system will help him or
her to attain gains in job performance), Effort Expectancy (The degree of ease associated with
the use of the system), Social Influence (The degree to which an individual perceives that
important others believe he or she should use the new system) and Facilitating Condition (The
degree to which an individual believes that an organizational and technical infrastructure
exists to support use of the system).

This theory is then being applied and modified by a few studies on the use of technology by
auditors. For examples, it has been applied by Wehner and Jessup (2005) and Janvrin et al.
(2009). Wehner and Jessup (2005) were studied more on individual factors that influence an
auditors use of GAS. Janvrin et al. (2009) found that performance expectancy and
organisational and technical infrastructure support influence the likelihood that auditors will
use CAATs.

However, contrary to UTAUT, there are also other element that exclusively applied for the
auditing profession especially when its come to the nature of the audit process, the
uniqueness of every audit itself and the use of professional judgement within the profession.

Brunel Business School Doctoral Symposium 28th & 29th March 2011 Paper 81

Lovata (1988) found three factors that she believes affect the audit procedure used which are,
the sophistication of the computer system, the strength of internal controls and the
characteristics of the clients internal audit department. Curtis and Payne (2008) suggest that
by using longer-term budget and evaluation periods, audit firms have the ability to influence
the implementation of GAS.

Havelka and Merhout (2007) have developed a model of IT audit quality which comprise of
five factors that affect the IT audit quality. These factors include client, IT audit personnel, IT
audit organization, target process or system and audit process/methodology factors. With the
combination of these factors and the variables from the UTAUT elements as well as the
factors that previously undertaken by other researchers, the model as shown in Figure 1.0 is
developed.

Brunel Business School Doctoral Symposium 28th & 29th March 2011 Paper 81

Technological
Factors
Auditor

Organisational
Factors

Use
GAS
Organisation

Professional
Factors
Client
Factors
Individual
Factors
External Factors

Impact on
Audit
Effectiveness
and Efficiency

GAS
Usage

Audit Task

Client

Environment
Not
Use
GAS

Audit
Profession

Figure 1.0: Research Model for the Use of Generalised Audit Software (GAS) by External Auditors

The factors that influence the use of GAS have been categorised into six groups see Figure
1.0. Each of this group has a few elements that has been listed and explained in Table 1.0.
They are some of the reasons affecting the use of GAS or probably the reasons for not
adopting GAS by external auditor that going to be tested.

Element
Technological
factors

Description
The technological category includes
all the factors which are related to
the installation and the usage of
audit software.

Organisational
factors

The organisational category includes

all the aspects within the audit firms.

Factor
Compatibility of software with existing operating
systems
Up-to-date firms ICT infrastructure
Ease of use
Adequate and sufficient documentation to follow
Easy to modify and upgrade
Full support from top management
Strong IT support from IT staff
Availability of IT audit expertise from audit team or
audit department
Effective and adequate training for staff
Sufficient implementing cost

Brunel Business School Doctoral Symposium 28th & 29th March 2011 Paper 81

Professional
factors

The professional category includes

all the aspects within the audit
profession.

Client factors

The environmental category

includes all the aspects while the
auditors auditing the clients
account.

Individual
factors

The individual category includes all

the factors that are dependent upon
the auditor itself.

External
factors

The external category includes all

the other factors that are not
included in the above category.

Sufficient maintaining cost

Enough resource to use GAS
Instructed by the management to use GAS
Demand in auditors promotion policies
Workloads on multiple audit engagement
Financial budget on audit engagement
Sufficient time allocated to audit assignment
Requirement by professional auditing standards
The existence of audit methodology to follow
Using own professional judgement
The usefulness of the application for auditing
Strength of clients internal control systems
Complexity of clients IT environment
Complexity of clients business environment
Difficulty to access clients data
Client concern about data security
Client business size
Support provided by clients IT personnel
Experience with computerised auditing
Experience with larger audit clients
An attempt to ensure public accountability
Enough knowledge to use GAS
Understanding of the application
Easy to become skilful using GAS
Prefer to use GAS rather than traditional audit
Use GAS regularly in audit assignment
Adequate technical support from vendors
The similar application has been used by other audit
firms

Table 1.0: Factors that influence the use of Audit Software

RESEARCH METHOD

Primary data is collected using electronic survey. The items data from the literature review
has been used to design the questionnaire. It has been piloted to test the validity and the
reliability of the main questionnaire. A few auditors and academicians has been involved is
this stage.

The feedback from the pilot test has been used in designing the final questionnaire. The
questionnaire has been sent out to the external auditors in audit firms in the UK. According to
Register of Statutory Auditors as at 30/01/2011, there are 26,661 auditors who have been

Brunel Business School Doctoral Symposium 28th & 29th March 2011 Paper 81

approved to carry out the annual accounts or consolidated accounts in the UK and there are
7,833 audit firms which can carry out statutory audit. All of these firms are registered under
Recognised Supervisory Bodies (RSB) as below:
1.

Chartered Accountants Ireland (CAI) - 1,005 firms

2.

The Association of Authorised Public Accountants (AAPA) 0 firm

3.

The Association of Chartered Certified Accountants (ACCA) 2,231 firms

4.

The Institute of Chartered Accountants in England & Wales (ICAEW) 4,355 firms

5.

The Institute of Chartered Accountants of Scotland (ICAS) 242 firms

Firms under ICAEW and ICAS have been selected as a sample. The letter of invitation has
been sent out through email since 1/2/2011 and it is now in the process of waiting the
feedback and doing the follow up. Quantitative and qualitative data analysis methods will be
used to classify and analyse the data.

CONTRIBUTION

The findings of this study would extend the existing literature on the use of GAS by external
auditors and should be of significant interest to standards setters regulating the audit
profession, educators designing university courses, and audit practitioners evaluating their
own knowledge or considering continuing professional education. It is hoped that the findings
of this study would initiate discussion, debate, and action that will lead to positive changes in
the audit profession.

This study represents a more comprehensive study of the usage of GAS by external auditors
than has previously undertaken. The first part of this study deals with the perception of GAS

Brunel Business School Doctoral Symposium 28th & 29th March 2011 Paper 81

and audit technologies among the external auditors in various firm sizes. The second part
investigates the reasons behind GAS usage in financial statement auditing. The reason is not
just establish why the auditors use GAS but also why the application has not being used by a
particular auditor or particular audit task or probably in particular auditors client. The impact
of GAS also will be identified from the various perspectives.

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Brunel Business School Doctoral Symposium 28th & 29th March 2011 Paper 81

REFERENCES
Braun, R.L. & Davis, H.E. (2003), Computer-Assisted Audit Tools and Techniques: Analysis
and Perspectives, Managerial Auditing Journal, vol. 18, no. 9, pp. 725-731.
Curtis, M.B. & Payne, E.A. (2008), An examination of contextual factors and individual
characteristics affecting technology implementation decisions in auditing,
International Journal of Accounting Information Systems, vol. 9, no. 2, pp. 104.
Debreceny, R., Lee, S., Neo, W. and Toh, J.S. (2005). Employing generalized audit software
in the financial services sector: Challenges and opportunities. Managerial Auditing
Journal, vol. 20, no. 6, pp. 605-618.
Havelka, D. and Merhout, J. (2007). Development of an Information Technology Audit
Process Quality Framework. In Americas Conference on Information Systems
(AMCIS) 2007 Proceedings.
Janvrin, D., Bierstaker, J. & Lowe, D.J. (2009), An Investigation of Factors Influencing the
Use of Computer-Related Audit Procedures, Journal of Information Systems, vol. 23,
no. 1, pp. 97-118.
Janvrin, D., Bierstaker, J. & Lowe, D.J. (2008), An Examination of Audit Information
Technology Use and Perceived Importance, Accounting Horizons, vol. 22, no. 1, pp.
1-21.
Janvrin, D., Lowe, D.J. & Bierstaker, J. (2009), Auditor Acceptance of Computer-Assisted
Audit Techniques, American Accounting Association Auditing MidYear
MeetingAAA, St. Petersburg, Florida, pp. 1.
Lovata, L.M. (1988), The Utilization of Generalized Audit Software, Auditing: A Journal of
Practice & Theory, vol. 8, no. 1, pp. 72-86.
Venkatesh, V., Morris, M.G., Davis, G.B. & Davis, F.D. (2003), User Acceptance of
Information Technology: Toward a Unified View, MIS Quarterly, vol. 27, no. 3, pp.
425-478.
Wehner, D. & Jessup, C.M. (2005), Factors Affecting Generalised Audit Software Usage,
AAA Midwest Accounting Meeting.

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