The factors affecting CAATs adoption evidence in ho chi minh city

1.2.2 Research on the development of CAATs Traditional audit has performed periodically by manual, time-consuming procedures for sampling, control testing, detailed testing and providin

STATE BANK OF VIET NAM MINISTRY OF EDUCATION AND TRAINING

BANKING UNIVERSITY OF HO CHI MINH CITY



TRANG DIEU AI

THE FACTORS AFFECTING CAATs

ADOPTION – EVIDENCE IN HO CHI MINH

CITY

GRADUATION THESIS MAJOR: ACCOUNTING AND AUDITING

CODE: 7340301

HO CHI MINH CITY, 2021

HO CHI MINH CITY, 2019

STATE BANK OF VIET NAM MINISTRY OF EDUCATION AND TRAINING

BANKING UNIVERSITY OF HO CHI MINH CITY



TRANG DIEU AI

THE FACTORS AFFECTING CAATs ADOPTION

EVIDENCE IN HO CHI MINH CITY

GRADUATION THESIS MAJOR: ACCOUNTING AND AUDITING

CODE: 7340301

RESEARCH INSTRUCTOR

DR NGUYEN THI MAI HUONG

HO CHI MINH CITY, 2021

Key words: CAATs Adoption, Performance Expectancy, Effort Expectancy,

Social Influcence, Facilitating Conditions

DECLARATION OF AUTHENCITY

I the undersigned declare that all material presented in this paper is my own work

or fully and specifically acknowledged wherever adapted from other sources

I understand that if at any time it is shown that I have significantly misrepresented material presented here, any degree or credits awarded to me on the basis of that material may be revoked

I declare that all statements and information contained herein are true, correct and accurate to the best of my knowledge and belief

Ho Chi Minh City, 27 March , 2021

Trang Dieu Ai

ACKNOWLEDGEMENTS

First at all, I would like to express my sincerest and deepest thankfulness to Dr Nguyen Thi Mai Huong for her guidance and patience in giving me valuable recommendations during my study period I am really happy and fortunate to carry out this study under her supervisor

Secondly, I would like to send my profound gratitude to all of the lecturers in Accounting and Auditing Department and also in Office of Academic Affairs during a period of studying for a bachelor degree at Banking University of Vietnam

Lastly, I would like to thank my family for their support during my study and during

my life Without whose encouragement and sacrifice, I would not have finished this thesis, so I express my special love and gratitude to them

Warmest regards

Trang Diệu Ái

TABLE OF CONTENTS

ABSTRACT i

DECLARATION OF AUTHENCITY ii

ACKNOWLEDGEMENTS iii

TABLE OF CONTENTS iv

LIST OF ABBREVIATIONS vii

LIST OF TABLES ix

LIST OF FIGURES AND DIAGRAM xi

CHAPTER 1 1

INTRODUCTION 1

1.1 The necessity of the topic 1

1.2 Overview of related research 2

1.2.1 Research on the development of information technology systems 2

1.2.2 Research on the development of CAATs 4

1.2.3 Research on the factors affecting the CAATs adoption in the field of FSs audit 6 1.3 Objectives of the Research 12

General objective: 12

Detailed objective: 12

1.4 Questions of the Research 13

1.5 Subjects of the Research and Scopes of the Research 13

Scopes of the study 13

1.6 The Research Methodology 13

1.7 Expected contribution of the Research 14

1.8 Thesis Structure 14

CHAPTER 2 16

THEORY FOUNDATION ON CAATs 16

2.1 DEFINITION AND ROLE OF CAATs 16

2.1.1 Definiton 16

2.1.2 The role of CAATs in FSs audit 19

2.1.3 Responsibility and requirement for auditor in the application of CAATs 22 2.2 OVERVIEW OF CAATs 24

2.2.1 General features 24

2.2.2 International standards for CAATs 27

2.2.3 Auditing tools and techniques of CAATs 29

2.3 FACTORS AFFECTING THE APPLICATION OF CAATs 31

2.3.1 Performance Expectancy 32

2.3.2 Effort Expectancy 34

2.3.3 Social Influcence 35

2.3.4 Facilitating Conditions 36

CHAPTER 3 39

THE RESEARCH DESIGN 39

3.1 RESEARCH PROCESS 39

3.2 RESEARCH METHODS 39

3.3 SAMPLE DESCRIPTION 42

3.4 DATA SOURCE 45

3.5 BUILDING THEORY AND RESEARCH MODEL 46

3.5.1 Scales of research design 46

3.5.2 The questionnaire design 50

3.6 PROPOSED RESEARCH MODEL 51

CHAPTER 4 55

THE EMPIRICAL RESULTS 55

4.1 GENERAL SITUATION OF CAATs ADOPTON IN VIETNAM 55

4.2 DESCRIPTIVE AND FREQUENCY STATISTICS 58

4.2.1 Description of survey data 58

4.2.2 Descriptive statistics 61

4.2.3 Frequency statistics 62

4.3 ANALYZE AND EVALUATE THE SCALES 67

4.3.1 Evaluate the reliability of the scales 67

4.3.2 Exploratory Factor Analysis – EFA 68

4.4 TEST THE RESEARCH MODEL AND HYPOTHESES 72

4.4.1 Test the hypotheses 72

4.4.2 Results of correlation analysis and multivariate regression 76

CHAPTER 5 86

DISCUSSION OF RESEARCH RESULTS AND PROPOSAL RECOMMENDATIONS 86

5.1 DISCUSSION OF RESEARCH RESULTS 86

5.2 PROPOSAL RECOMMENDATIONS 89

5.2.1 Impact on the factor “Performance Expectancy” 90

5.2.2 Impact on the factor “Effort Expectancy” 91

5.2.3 Impact on the factor “Social Influence” 93

5.2.4 Impact on the factor “Facilitating Conditions” 94

5.3 SOME LIMITATION OF THE STUDY 96

5.3.1 Limitation 96

5.3.2 Future studies 96

GENERAL CONCLUSION 98

REFERENCES xiii

APPENDIX xviii

2 Abbreviations originated from English words

Accountants

Computer-aided audit tools

EFA Exploratory Factory Analysis

Standards Board

Accounting Oversight Board

LIST OF TABLES

Table 1.1: Measure the independent variables in the model 11

Table 2.1: Comparison between traditional audit and audit with CAATs adoption 28

Table 3.1: Synthesize the number of audit firms provide independent audit service for 100 listed companies on HoSE 43

Table 3.2: The statistical inspection of audit firms classified by size 44

Table 3.3: Questionnaire structure and the scale 50

Table 3.4: Hypotheses of the correlation between independent variables and CAATs Adoption 53

Table 4.1: Experiences and position of survay objects 58

Table 4.2: Structure of audit firms 59

Table 4.3: Average annual net revenue of audit firms collected from Website of VACPA, last updated on 29/5/2018 59

Table 4.4: The number of professional staff and auditors 60

Table 4.5: Descriptive statistics of all variables 61

Table 4.6: Frequency statistics of “CAATs Adoption” 62

Table 4.7: Frequency statistics of “Performance Expectancy” 63

Table 4.8: Frequency statistics of “Effort Expectancy” 64

Table 4.9: Frequency statistics of “Social Influcence” 65

Table 4.10: Frequency of “Facilitating Conditions” 66

Table 4.11: KMO and Bartlett Test 68

Table 4.12: Total Variance Explained 69

Table 4.13: Rotated Component Matrix 70

Table 4.14: Summary of Testing methods Research Summary of Testing Hypotheses 73

Table 4.15: Correlation between PE and CAATs Adoption 73

Table 4.16: Correlation between EE and CAATs Adoption 74

Table 4.17: Correlation between SI and CAATs Adoption 74

Table 4.18: Correlation between FC and CAATs Adoption 75

Table 4.19: Summary of Testing Hypotheses 75

Table 4.20: Correlation matrix (Pearson) among CAATs Adoption and independent variables 76

Table 4.21: Model Summary 78

Table 4.22: ANOVA a 79

Table 4.23: Results of regression model 82

LIST OF FIGURES AND DIAGRAM

Figure 3.1: Reseach model 52

Figure 4.1: Results of classification in quality during 3 years 56

Figure 4.2: Residual scatter plot 80

Figure 4.3: Histogram frequency chart 81

Figure 4.4: The standard distribution of the residual observed 81

CHAPTER 1 INTRODUCTION 1.1 The necessity of the topic

Information technology (abbreviated IT) has been widespread in the global business environment for many decades, especially with the rapidly changing demands of clients As a labor-intensive industry, auditing requires high level of consistency and efficiency to increase productivity of auditors throughout the audit process Therefore, the use of information technology in this process will increase productivity, deliver faster communications and secure client data Recent audit trends have set rules that put greater pressure on auditing firms to be efficient and willing to compete on fee Consequently, the topic of auditors using computer-aided audit techniques (CAATs) is a great interest not only to auditors but also to related parties

The relentless changes in the business world in recent years have blamed by the modern information and technology revolution Computer-based tasks have successfully replaced paper-based jobs in the vast majority of business organizations today Auditing is one of the areas that witnessed a great change Paper-based auditing has also been replaced by computer-based auditing, however it still exists and has used by a number of companies

In recent years, the adoption and development of information technology in management and production activities of state agencies, organizations and enterprises is becoming significant Therefore, risk management in information technology is increasingly enhanced in agencies and businesses, even becoming an essential part of corporate governance, playing a decisive role for the success of most organizations As a result, the confidentiality, integrity, availability, and reliability of computerized data and systems of process, maintain and report these data are of great concern to audit Hence, auditors not only know technology

auditing but also must be able to use technology to perform audits better, faster and smarter

The use of computers, computer networks and software programs has enabled auditors to immediately inspect and control arising operations, thereby detecting and promptly preventing errors and frauds, negative behavior or failure to comply with internal control regulations such as: handling beyond authority, exceeding payment limits, financial spending, cash balance specified

However, in Vietnam, the concept of CAATs audit is still quite new, but with many developed countries around the world, this is a job that has been done regularly in organizations recently Therefore, the change of IT is the motivation for Vietnam's audit segment to develop, reform processes and approaches

Stemming from the above practical problems, the author chose the topic "The factors affecting CAATs Adoption - evidence in Ho Chi Minh city" as the

research topic of the graduate thesis for myself

1.2 Overview of related research

1.2.1 Research on the development of information technology systems

Information System (abbreviated IS) is a research area that focused on the application of information technology (abbreviated IT) compatible with the IS design to increase usability, ease of use and suitability to specific environmental characteristics of organizations (Benbasat, I., and RW Zmud, 2003) In the 1960s,

IS became an independent studying field and was primarily about behavioral research Until society's demands for practical contributions to IS, the interpretative approach has become more popular but has not really affirmed its scientific value (Benbasat, I., and RW Zmud, 2003) Later, empirical studies on this issue in a specific context were spread in many countries around the world, especially in Europe such as Northern Europe, the Netherlands, Italy and France (Winter, R., 2008)

The research perspective on how IS operating towards IT behavioral approach had been becoming a new trend (Lee, A.S., 2000) Trends in technology application differed between IT generations (Baxter, RJ and Berente, N., 2010) and it was hardly surprising that the Technology Revolution appeared (Weller, T., 2008 ) Most of the intellectual wave originated from Europe, especially the United States, although initially different but gradually spread and merged with each other across countries (Hirschheim, R and Klein, H., 2012) IS has been seen as a complex social object influenced by culture and political interests (Symons, V.J., 1991) Although the results of previous studies have demonstrated that benefits of IS in improving firms' performance, consideration should be given between benefit and cost relationships (Alter, S., 2013)

By the end of the twentieth century, many studies on the development of IS in business organizations (Beniger, R., 1986; Yates, J., 1989) included many different principles and views on IS Social view (ii) emphasized that information is system generated in terms of socio-cultural context, organizational structure and leadership views (Leonardi, P.M and Barley, S.R., 2010) From a technology perspective (i), many previous studies said that IT plays an important role in the deployment, use and development of IS in practice (Symons, VJ 1991; Avital, M 2014) because IT

is part of society and society counld not be understood or represented for IS without technological tools (Castells, M., 1996) However, many other studies suggested that the same IT system could have different effects on human interaction in certain organizations (Jones, M and Karsten, H., 2008) In addition, many studies suggested that IT tended to fail if social aspects were not fully considered in the IS development and implementation (Zammuto, R.F et al., 2007) Obviously, the view

on the interaction between (iii) society - technology confirms the development trend

in IS studies (Lee, A.S., 2010) In a different approach from the above points, the view emphasizes how it works in relation to IS, such as: Use, store, exchange, collect, transmit, and provide information implemented by different objects in an organization and supported by technology (Alter, S., 2008, 2013)

IS characteristics relating to people, information, processes and information technology designed to transform inputs into outputs in order to achieve goals (Alter, S., 2008, 2013) As IS can therefore be enhanced in its interaction with human behavior and corporate governance practices, many studies of IS effectiveness show a positive relationship between the quality of information provided and potential value that IS creates in an organization (Petter, S et al., 2008) Quality is assessed on the following criteria such as internal factors (accuracy and reliability), context (relevance, timeliness and completeness), representativeness (consistency, ease of interpretation) likes, uniformity) and accessibility (access, confidentiality) However, the decision depended on the internal and external factors of a particular business with a certain level of experience and skills in different cultural contexts, organizational structures, and technological environments (Cyert, MR et al., 1956) Furthermore, decisions has become more certain as organizations tend to spend more time building IS (Burton, F.G., 2001) Therefore, to achieve optimal effectiveness in an IS strategy that depending on the decision-making of management levels and the level of awareness, accessibility and learning spirit Along with this point of view, Leidner, D.E et al (1995) argued that there was a relationship between interests of IS building and perceptions, ability to analyze information, and speed of decision making by corporate executives

1.2.2 Research on the development of CAATs

Traditional audit has performed periodically by manual, time-consuming procedures for sampling, control testing, detailed testing and providing periodic reports (Chan, DY and Vasarhelyi, MA, 2011) Using the traditional audit method

to audit financial information in real-time continuity was no longer feasible (Sutton,

S G., 2000) The rapidly growing IT trend has affected significantly and continuously to the financial statements (FSs) audit process and has created a challenge for the firms to change from traditional manual audit to audit with CAATs adoption (Cash Jr and et al., 1977; Gray, G.L et al., 2014) Moreover,

practice has showed that traditional audit and assurance services provided by auditors have not kept pace with the developing economy in real time (Chan, D.Y and Vasarhelyi, M A., 2011) In audit field, the term CAATs have becoming more popular, understood as computer programs and data that auditors uses as part of the audit process (Mahzan, N and Lymer, A., 2008)

Since the 1990s, companies around the world have invested heavily in the implementation of Accounting Information Systems (Abbreviatied AIS) development In the early years of development, AIS did not create many opportunities for auditors to significantly change the use of technology in manual systems In this direction, automating the audit processes by setting up IT could help increase the quality and efficiency of audit (Dai, J., and Vasarhelyi, M A., 2016) Transforming AIS into a computer environment with technological developments has brought a definite impact on CAATs adoption The view of IS in the FSs audit has been not understood as a tool, system or a scientific and technical category, but the previous research study on behavioral research has presented that

IS was approached as a process with total individual factors influence the behavior

of CAATs adoption in the context of the organizations Moreover, with the use of

IS in audit based on advanced technologies that can be compatible with AIS has become an important issue

The trend of IS development in FSs audit related to different technology contexts from generation 1.0 - Manual audit, 2.0 - IT audit, 3.0 - Access to big data

in analysis audit to 4.0 - Semi / continuous automatic technology audit (Dai, J., and Vasarhelyi, MA, 2016) Industrial Revolution 4.0 has enabled the entire enterprise value chain to communicate across the global network From there, many studies shifting the flow of IS construction in business organizations could be optimized (Alter, S., 2008), information supply chain (Fang, F et al., 2008) or human behavior

in the organization (Johnstone, D and Tate, M., 2004) IS has focused on processes allowing for the automation of procedures, reducing the work of auditors

(Vasarhelyi, M A et al., 2014) This is obvious that in the context of technology 4.0 around the world, focusing on the point of view of the process, emphasizing on how to operate related activities when building IS in the FSs audit in the audit firms, which is rather than focusing only on technology, society or the relationship between technology and society

The conceptual premise of CAATs mainly has included electronic working papers and spreadsheet applications (Braun, R.L and H.E Davis., 2003) Then, expanding the scope towards a series of supporting technologies such as general audit software, reporting audit software, network security assessment software (Mahzan, N., and Lymer, A, 2014) Furthermore, CAATs have provided a vast opportunity for audit practitioners to leverage new technologies to collect large amounts of audit-related data in real time, automate repetitive processes and ultimately to achieve comprehensive However, the investment and adoption of CAATs among audit firms has remained controversial (Mahzan, N., and Verankutty, F., 2011) Moreover, the rate of using technology in the audit process was low (Ahmi, A and Kent, S., 2013) and CAATs in many studies showed that the trend of using was not really effective in some audit firms (Curtis, MB, and EA Payne., 2008) This article has started from the question of what are the factors affecting the IS application in the FSs audit? and design a research process to answer this question from a perspective related to the behavior of auditors in CAATs adoption in the FSs audit process at independent audit firms in the Vietnamese context

1.2.3 Research on the factors affecting the CAATs adoption in the field

of FSs audit

The formation of IS has varied widely in different regions of the world In North America, in the beginning, research on IS was part of the computer science research of information processing through computer systems In other words, the research on informatics should put under an interdisciplinary perspective between

science/technology research and organization/administration, including computer science, IS, IT and economics A review of the IS design development process has shown that this is an essential component of computer science and its nature understood in the interdisciplinary relationship between technology and corporate governance And the system implementation phase in the audit field can be approached under 3 main ways, including: (i) auditing around the computer (ii) auditing through computer and (iii) auditing with the computer (Bodnar, GH & Hopwood, WS, 2004) In general, an AIS includes Input - Processing - Output, however, (i) when the auditors only audit around the computer, it means the processing will be ignored

The AIS inputs are manually selected and summarized for comparison with the outputs Later, with the advancement of IT, this first approach was no longer relevant and was implicitly ignored in the audit process as it never existed On the other hand, (ii) auditing through computer always takes into the nature of IT and internal control systems in the IT application environment with regard to general controls and application controls in AIS, according to standards of practice specified by professional bodies, such as AICPA Until AIS has actually developed the same large amount of data, such as Big Data stored in a specific data warehouse, (iii) auditing with computer has been understood as the process of using IT in audit

to complete assurance work instead of having to be done manually The use of IS in

a technology approach has been an indispensable trend and no longer an option, since most of the data that the auditors must evaluate has been in electronic format Furthermore, organizations depend on IS to stay competitive, and many studies have agreed that investing in IS is an important approach for companies seeking competitive advantage (Symons, VJ, 1991) From this point, when these research achievements have inherited in developing countries, differences in context regarding social, economic and cultural characteristics become more noticeable within the academic community (Sahay, S and Avgerou, C., 2002) Although, in an overview of current researchs in developing countries, the research flow on IS can

be classified into three groups of topics: (i) Key challenges to its use; (ii) The role

of technology; (iii) Foundation theory and methodology (Walsham, G and Sahay, S., 2006)

Above all, the factors influencing the trend of applying IS in the organization need to be approached from both a motivating and hindering perspective within the scope of the individual user, but the behavior of an individual depends on the internal and external factors of the organization And as the research flow has based

on the role of technology in a specific field develops, these factors have been aggregated according to each of the social context characteristics and different approaches

In the area of audit, the standard 5 (PCAOB, 2007), which requires the integration of IT into the FSs audit and CAATs, has been adopted in the guidance of the International Federation of Accountants (IFAC) However, evidence suggested that the adoption of basic test software such as CAATs has been slower than expected (Rowe, R., 2008) and much slower than using technology for audit planning and audit management (Curtis, MB, and EA Payne., 2008) Because the application of technology in the audit process was often optional (Rowe, R., 2008), the degree of voluntary application was different in many cases, maybe the delay was due to conservatism and rigidity in the specific career characteristics of audit (Gray, GL et al., 2014), lack of training in technology skills for employees (Mahzan, N and Lymer, A., 2008) or lack of technology tools helping auditors automate job functions (Brown-Liburd, H et al., 2015)

Although, the proportion of technology implementation in audit can significantly improve audit quality, efficiency and efficiency in the audit process (Braun, RL and HE Davis., 2003; Curtis, MB, and EA Payne , 2008) but it is necessary to consider revenue from audit contract with operating cost of audit software and time for user technology training (Curtis, MB, and EA Payne., 2008)

In other words, the perceived value of auditors from ease of use and the expected

effect will influence the intention to use CAATs in the future (Pennington et al., 2006) In addition, this intention of auditors is also significantly influenced by the decision of the high-level staffs of an independent audit firm with the pressure to balance the service fee with the invested technology cost (Curtis, MB, and EA Payne., 20 08) Therefore, the adoption of CAATs in audit firms should not be approached as simple as using a computer tool, but the IS system designed should encode in accordance with the assumptions within the organization In other words, the view of each individual auditors at adoption behavior depends on the firm-decision in the IS implementation process (Kling, R and R Lamb., 1999) and an important part of this process is software technology (Morrison, J and JF George, 1995) in the recognition of each country's own legal environment

In addition, the next group of research topics related to the application of many background theories in research on IS (Orlikowski, WJ and Stephen RB, 2001) such as structural theory (Giddens, A., 1984), institutional theory (Sahay, S and Avgerou, C., 2002) Hence, the academic community has paid more attention

to the inheritance and development of fundamental theories to increase the scientific value of the problem under its own perspective (Benbasat, I., and RW Zmud, 2003) Regarding the study of behavior, theory of planning behavioral (TPB) proposed by Ajzen, I (2005) developed from the theory of rational action in previous research

by Fishbein, M and Ajzen, I (1975) Ajzen, I (2005) assumes that a tendency behavior can be predicted or explained by the behavioral intention to perform that behavior Behavioral tendencies are defined as the degree of effort made to attempt the act (Ajzen, I., 1991) This is understood that the individual's perception will affect the individual's attitude, thereby affecting his own behavior Attitude is sometimes motivating, sometimes it hinders behavioral intentions From intention

to personal behavior are also influenced by other factors such as motivation, perception and sense of action In the behavior of technology application, TPB contributes to explain the different relationships between beliefs, attitudes, intentions and behaviors (Bandura, A et al., 1980)

In the area of audit, the standard 5 (PCAOB, 2007), which requires the integration of IT into the FSs audit and CAATs has been adopted in the guidance of the International Federation of Accountants (IFAC) V et al (2003) presented the research model explaining the intentions of the auditors using CAATs and the next implementation behavior in the FSs that based on Venkatesh's UTAUT theory There has been the tew research approach in many recent studies (Wehner, D and Jessup, CM, 2005; Mahzan, N and Lymer, A., 2008; Curtis, MB, and EA Payne., 2008; Janvrin, D and colleagues, 2009; AL Barak Khalil, 2020) Summary of theoretical model of factors influencing IS application in financial statements report The research results show that viewpoints on IS have been summarized through four aspects: (i) Technology; (ii) Society; (iii) Society - technology; (iv) Process In which, research on IS application in audit firms has approached FSs audit process; The process of forming and developing IS in the audit field has been through 4 generations from 1.0 (Manual Audit), 2.0 (IT Audit), 3.0 (Big Data) to 4.0 (Semi / continuous automatic audit technology) From the perspective of auditor‟s behavior

at independent audit companies in the current Vietnamese context, the article has proposed the UTAUT theoretical model of Venkatesh, V et al (2003) to identify the factors affecting CAATs adoption in FSs audit This is considered a research trend on the application of IS in interdisciplinary relationships with computer science

However, evidences have proved that the adoption of basic test software such

as CAATs has been slower than expected (Rowe, R., 2008) and much slower than using technology for audit planning and audit management (Curtis, MB, and EA Payne., 2008) Because the application of technology in the audit process is often optional (Rowe, R., 2008), the degree of voluntary application is different in many cases, maybe the delay is due to conservatism and rigidity in the specific career characteristics of audit (Gray, GL et al., 2014), lack of training in technology skills for employees (Mahzan, N and Lymer, A., 2008) or lack of technology tools helping auditors automate assurance functions (Brown-Liburd, H et al., 2015)

Although, the extent of technology implementation in audit can significantly improve audit quality, efficiency and efficiency in the audit process (Braun, RL and

HE Davis., 2003; Curtis, MB, and EA Payne , 2008) but it is necessary to consider revenue from contract with operating cost of software and time for user technology training (Curtis, MB, and EA Payne., 2008)

Through the synthesis of previous studies, the author found that there are many observed variables included in the model according to different approaches However, based on the repeatability of the research results in evaluating the influence of factors on CAATs, the UTAUT model (Venkatesh et al., 2003) and the study of AL Barak Khalil (2020) have been The author chooses to inherit the factors affecting CAATs when studying this issue in Vietnam Because the UTAUT model, also known as the Unified Theory of Acceptance and Use of Technology model was developed by Venkatesh et al (2003) for the purpose of testing technology adoption and using applying a more unified approach, the model is applied in many areas including auditing, in addition, the study of AL Barak Khalil (2020) explored the factors that affect the adoption of CAATs to External audits in Yemen, the results from this study are highly up-to-date and the subjects are from Asia - close to Vietnam Therefore, the author chooses to inherit mainly from these two studies and summarizes in Table 1.1 below:

Table 1.1: Measure the independent variables in the model

Venkatesh et al (2003), Janvrin

et al (2008) ,AL Barak Khalil (2020)

+

2 Effort

Expectancy EE

The ease of using CAATs

Venkatesh et al (2003), Bierstaker, J., et

+

al (2013) ,AL Barak Khalil (2020)

he or she should apply CAATs

Venkatesh et al (2003), Al_Khasawneh Ayman Mohammad, et

infrastructure and

infrastructure can support the use of CAATs

Venkatesh et al (2003), Janvrin

et al (2008), AL Barak Khalil (2020)

+

Source: Summary by author

1.3 Objectives of the Research

General objective:

Identify and measure the factors affecting CAATs (Computer-assisted audit tool), through the results of experimental research on this issue in Ho Chi Minh City, the author proposes some policy implications to enhance CAATs

Detailed objective:

- Determine the factors affecting CAATs;

- Survey and measure factors affecting CAATs in Ho Chi Minh City;

- Proposing solutions to enhance CAATs in Ho Chi Minh City

1.4 Questions of the Research

Q1: What factors are affecting CAATs?

Q2: What factors are affecting CAATs in HCMC?

Q3: What solutions are proposed to enhance CAATs in HCMC?

1.5 Subjects of the Research and Scopes of the Research

Subjects of the Research

- Subjects of study: CAATs; and factors affecting CAATs;

- The main object of the survey is professional auditors working in many different positions at auditing companies in Ho Chi Minh City

Scopes of the study

- In terms of space: The survey was conducted within Ho Chi Minh City and focused on independent audit services, not other areas such as internal audit or state audit

- In terms of time: Survey samples (expected) will be collected from January 15, 2021 to February 28, 2021

1.6 The Research Methodology

1.7 Expected contribution of the Research

In terms of practice:

This graduate thesis is a serious scientific research work of the author with the

following basic contributions:

- Firstly, determine the level of factors that affect CAATs in Ho Chi Minh City;

- Secondly, analyze and discuss the test results to propose possible solutions to factors to improve CAATs from research results in Ho Chi Minh City

1.8 Thesis Structure

Chapter 1: Overview of the Research

Chapter 2: Theoretical perspectives and theory foundation on CAATs

Chapter 3: The research design

Chapter 4: The empirical results

Chapter 5: Conclusion and Recommendations

CONCLUSION OF CHAPTER 1

Chapter 1 presents a number of relevant studies including both overseas and domestic studies After that, the author identifies gaps and shortcomings as a basis for proving the necessity when choosing this topic, the research partly contributes to the promotion of the adoption of CAATs in Ho Chi Minh City

This is the first study in Ho Chi Minh City to focus on the general factors affecting CAATs adoption by using a qualitative approach combined with a quantitative approach In addition, the study aims to build a general model and test the suitability of this model in Ho Chi Minh City

of international experience in IT audit development has been carried out synchronously in the following areas: (i) Applying IT to auditing activities: Recognizing the role of IT in auditing activities Especially, the use of IT to improve the efficiency of auditing work, in recent years, some softwares to support auditing activities have been put into practice, such as: Auditing Journal Software, Database audit clue software, audit progress management software, audit reporting and reporting support software, audit result synthesis software, audit proposal management software The initial results show that the application of IT in auditing activities not only contributes to the auditors having tools that are compatible with the IT system of the audit client, but also contributes to enhancing the professionalism and efficiency of auditing activities; (ii) Auditing in computer environment: integrating IT audits in a number of audits for clients and fields using

IT in management and administration to support internal control system evaluation,

in which the focus is on evaluating the effectiveness and efficiency of the IT

system; compliance with regulations in management and operation of IT systems and assessment of risks of material misstatement arising from IT systems Application of auditing techniques in IT environment should continue to research, complete, and disseminate to each auditor, in order to help auditors perform audits

in IT environment with quality and efficiency; (iii) Information technology system audit

Hence, CAATs can be defined as a computer-based tool designed to improve the efficiency and performance of the audit process, a field is growing in the 21st century These techniques include basic office software, spreadsheets and word processors, as well as advanced software programs that include business intelligence tools, statistical analysis can be performed, in parallel with the development of specialized audit software programs Many CAATs have been introduced to assist auditors when performing computerized accounting data audits One of the most widely deployed software tools is called general audit software (Singleton, 2006) This software is implemented by auditors to analyze and audit the data whether they are classified as direct data or data extracted from a wide range of applications (Debreceny et al., 2005) GAS is called data analysis software

or data analysis has been performed, to perform specific audit procedures and statistical analysis The functions of this software include: browse, analyze, classify, summarize, stratify, extract sample and perform calculations Despite the fact that the majority of auditors are currently applying electronic audit procedures to their work, core audit procedures are often not adopted without automation from GAS However, auditors still tend to adopt some of the most traditional audit procedures when composing their own audit opinions, depending on the accounting transaction instead of investigating all the available data

CAATs are often mentioned by auditors, but what they are, how they work and the benefits they bring are still quite debated from different research perspectives In fact, CAATs are a very broad and complex phrase Therefore, many

researchers around the world have made efforts to find a clear definition However,

as a matter of course, "the more people, the more perspectives", it will depend on different subjects and purposes leading to different perceptions of CAATs Many people misunderstand that CAATs are only found and used effectively by large organizations, but just utilize some of popular computing tools like Microsoft Excel

or Microsoft Word with clear work plans, that has also helped increase efficiency and accuracy in auditing In short, CAATs, which provide auditors with many advantages over traditional auditing techniques, are aimed at analyzing and evaluating an organization's technology infrastructure to find performance issues, risk management and compliance

Thence, CAATs can be defined as an audit method that uses computer software tools to query business data to generate reports in order to enhance audit performance CAATs can sometimes be called CAATs (Computer Assisted Audit Tools and Techniques) or BEAST (Beneficial Electronic Audit Support Tools) Braun and Davis identified CAATs as "any use of technology to assist in completing the audit" IT audit techniques or CAATs can be broadly defined to represent any use of the technology to support the completion of the assessment (Braun & Davis, 2003) However, a recent definition restricts the use of this term to

“various tools, technologies, and software that help auditors to conduct control and confirmation tests, analysis and verification of FS data, and continuous monitoring and auditing” (Lin & Wang, 2011: 777) CAATs were approved by the International Federation of Accountants (IFAC) in the 2001 edition (Ciprian-Costel 2014) Audit firms and auditors have actually introduced many CAATs These techniques have been improved to assist auditors in performing their audits, depending on the accounting information on the computer The definition of a computerized accounting information system has found its way into the world of accounting It was mentioned that one of the most important and widely used CAATs in electronic audits is general audit software abbreviated as GAS (Singleton, 2006) According to the Chartered Institute of Internal Auditors, “CAATs refer to the use of technology

to help you evaluate controls by extracting and examining relevant data Sophisticated use of CAATs can be known as 'data analytics' and is increasingly being used across the field”

2.1.2 The role of CAATs in FSs audit

Audit quality is a concept that has different definitions from many research papers DeAngelo (1981) hypothesized a two-dimensional definition of audit quality: First, material deviation must be detected and second, material deviation must be reported Therefore, Titman and Trueman (1986) proposed that, auditors must provide accurate information about the value of the companies Audit quality was defined as the probability that the FSs did not contain material mistatement (Palmrose 1988) While Davidson and Neu (1993) defined audit quality as auditors's ability to detect, remove and manipulate misinformation in reporting of net income

We can say that the audit quality demonstrates the ability to detect untrue and unfair information of the accountant and the degree of independence of auditors The next problem arises under the following question: Will auditors use CAATs to improve audit quality?

People who use FSs believe that audit reports ensure that the company's FSs are free of material mistatement and are free from fraud (Epstein and Geiger, 1994) However, the auditors provide audit reports to ensure reasonable compliance with the requirements of international accounting standards (IAS)

Previous studies have shown that auditors should use technologies for the audit process (DeAngelo 1981) as it can increase the efficiency and effectiveness of audit decision making (Janvrin et al, 2008 ) Furthermore, when auditors use technologies can increase the quality of the audit process and the quality of audit results (Manson et al 1998).However, need to distinguish between CAATs from IT Audits IT audit is the management controls within IT infrastructure Verification of obtained evidences to determine if information systems are securely protected assets, maintain integrity of data and operate effectively to meet the organization's

goals and objectives These assessments can be implemented in conjunction with a

FS Audit, Internal Audit, or other forms of audit An IT Audit is different from FS Audit While the purpose of a financial audit is to evaluate an organization with standard accounting practices, the purpose of an IT audit is to evaluate internal control system designs and its effectiveness In an information system (IS) environment, audit is a control of information systems, inputs, outputs and processing processes

With the support of CAATs, more analyzes can be performed Working with CAATs, it is essential that the accountant or auditor has to choose the accruate data, the selection process is complicated and you need to be professional in the field After selecting the correct data, enter it into the CAATs, and the tools will automatically generate the analysis data CAATs have the following outstanding advantages:

- Comprehensive testing method, since entire data can be tested instead

of just a few samples

- Filter large volumes of data to identify cases of financial weakness, policy non-compliance, and errors or errors in data processing

- Continuous monitoring to identify and respond to operational risks, helping auditors reduce ineffective manual procedures

CAATs include support technologies such as general audit software, audit reporting software, network security assessment software (Mahzan, N., and Lymer, A, 2014) These softwares not only support the preparation of working papers but also assist in managing audit work These softwares can integrate many steps and audit procedures that need to be performed and are built to match different industries such as manufacturing, commerce, banking Samples of each other are formulated to correspond to each stage of the audit, such as audit planning, performance and reporting In addition, these audit software are excellent, with many different functions such as the function of marking unfinished working

papers, unreviewed papers, or marking the documents that required approval from vary levels such as director or manager This increases the ability to check working papers effectively The nature of working papers is the foundation for auditors to make a decision whether or not to use electronics-based audits to replace paper-based audits There are many benefits companies get from doing electronic audits Electronic audit can minimize the overall pressures from the client as well as the audit department to complete the procedure Electronic audits can also shorten the audit time and cost or specific audit procedures for each item performed via electronic data at the same time Therefore, the benefits of using CAATs may include the following:

- Check the client's accounting software, as the auditor can verify if it is working correctly or not Auditors can check their accounting program and records directly from its origin, instead of checking paper documents that are supposed to be exact copies

- Examine large volumes of data in a short time and with high accuracy When auditors use CAATs, auditors will be more confident in their opinion

- Effective, because when an audit software is implemented, it can be used after 5 years to gather audit evidence, so cost savings can be made

- CAATs help make financial statements transparent in organizations, because they are tools where fraud is easy to detect

Auditors should make comparisons between the results obtained, using computer techniques and the results of traditional testing If the same results are obtained, the auditor's general confidence will increase

2.1.3 Responsibility and requirement for auditor in the application of

CAATs

Along with the significant development of the economy, the operations of enterprises are increasingly complicated, the transaction volume is increasing largely Operations of businesses today also heavily dependent on IT IT plays an important role in recording and processing transactions arising in enterprises Therefore, in order to be able to perform the audit of financial statements effectively, an inevitable trend is that the auditor needs to apply IT in auditing process

According to recent studies in Vietnam, IT is being applied to a certain extent in independent audit activities Typically as the research of PhD Ho Ngoc

Ha (2012) and PhD Le Thi Thu Ha (2015), the results showed that auditing firms in Vietnam have been applying IT, in the preparation and storing working papers However, the application level of auditing firms has not been synchronized with some shortcomings and limitations Currently, only audit firms such as Big Four and a few auditing firms that are members of international audit firms have used professional audit software in documenting and performing audit procedures Therefore, it is necessary to uphold the responsibility of information technology auditors, by:

- Improving professional capacity and professional ethics: The IT revolution brings many opportunities and challenges, with individuals working in the audit field to improve their technology capabilities and vision, and at the same time professional competence and ethics Enterprise's image is shown through professional ethics, an auditor who has professional ethics respecting the truth creates trust from customers

- Investment in the development of IT infrastructure in enterprises and prevention of network security vulnerabilities: Using audit software to

perform audit services, software for storing and securing audit data to ensure information security for customers, to avoid risks of information insecurity

The job requires a strong set of technical skills, a significant emphasis on security skills, but will also require soft skills like communication Analytical and critical thinking skills are also very important, because the auditors will need to evaluate the data to find trends and models to identify problems in the FSs Besides, auditors must keep up with electronic speed of their customers Clients need assistance in installing and upgrading their enterprise-wide computing platform Respondents pointed out that on average it takes two to three years for a company to completely migrate its old software to enterprise-wide computing platforms In these situations, the auditor should work with their clients to ensure that all necessary control and performance measures to evaluate each business process are applicable (Bierstaker, et al., 2001)

Auditors and IT professionals need to evaluate the customer's IS based on understanding and evaluating general control and application control activities to assess the reliability of the IS Amongst, general control activities relating to the entire IS, including the establishment, development and modification of programs and systems, physical control activities with computer systems, data and program access control activities, backup and failure planning, etc Control activities application related to input control, data processing and control output Auditing firms also need to work with clients, in order to be able to effectively perform CAATs, e.g communicating with clients in advance about export and storage the data related to the audit Therefore, in order to effectively use CAATs, auditing firms need to focus on developing a team of qualified IT auditors Auditors need to

be trained in IT as well as have a deep understanding of the structure and control activities in the customer IS If necessary auditing firms can use IT experts to assist

in the implementation of audit procedures

2.2 OVERVIEW OF CAATs

2.2.1 General features

According to documents from ACCA, Relevant to Foundation level Paper FAU and ACCA Qualification Papers F8 and the author have divided CAATs into three main groups and roles in the audit, specifically as follows:

- Audit software:

Definition: Audit software is a generic term used to describe computer programs designed to carry out tests of control and/or substantive procedures Such programs may be classified as:

 Packaged programs:

These consist of pre-prepared generalised programs used by auditors and are not „client specific‟ They may be used to carry out numerous audit tasks, for example, to select a sample, either statistically or judgementally, during arithmetic calculations and checking for gaps in the processing of sequences

 Purpose written programs:

These programs are usually „client specific‟ and may be used to carry out tests of control or substantive procedures Audit software may be bought or developed, but in any event the audit firm‟s audit plan should ensure that provision is made to ensure that specified programs are appropriate for a client‟s system and the needs of the audit Typically, they may be used to re-perform computerised control procedures (for example, cost of sales calculations) or perhaps to carry out an aged analysis of trade receivable (debtor) balances

 Enquiry programs:

These programs are integral to the client‟s accounting system; however they may be adapted for audit purposes For example, where a system provides for the routine reporting on a „monthly‟ basis of employee starters and leavers, this facility may be utilised by the auditor when auditing salaries and wages in the client‟s financial statements Similarly, a facility to report trade payable

(creditor) long outstanding balances could be used by an auditor when verifying the reported value of creditors

- Test data: Some programs may be classified as:

o Audit test data:

Audit test data is used to test the existence and effectiveness of controls built into an application program used by an audit client As such, dummy transactions are processed through the client‟s computerised system The results of processing are then compared to the auditor‟s expected results to determine whether controls are operating efficiently and systems‟ objectiveness are being achieved For example, two dummy bank payment transactions (one inside and one outside authorised parameters) may be processed with the expectation that only the transaction processed within the parameters is „accepted‟ by the system Clearly, if dummy transactions processed do not produce the expected results in output, the auditor will need

to consider the need for increased substantive procedures in the area being reviewed

 Integrated test facilities:

To avoid the risk of corrupting a client‟s account system, by processing test data with the client‟s other „live‟ data, auditors may instigate special „test data only‟ processing runs for audit test data The major disadvantage of this is that the auditor does not have total assurance that the test data is being processed in a similar fashion to the client‟s live data To address this issue, the auditor may therefore seek permission from the client to establish an integrated test facility within the accounting system This entails the establishment of a dummy unit, for example, a dummy supplier account against which the auditor‟s test data is processed during normal processing runs

- Other techniques: There are some detailed programs:

o Embedded audit facilities (EAFs):

This technique requires the auditor‟s own program code to be embedded (incorporated) into the client‟s application software, such that verification procedures can be carried out as required on data being processed For example, tests of control may include the reperformance of specific input validation checks (see input controls above) – selected transactions may be

„tagged‟ and followed through the system to ascertain whether stated controls and processes have been applied to those transactions by the computer system The EAFs should ensure that the results of testing are recorded in a special secure file for subsequent review by the auditor, who should be able to conclude on the integrity of the processing controls generally, from the results

of testing A further EAF, often overlooked by auditors, is that of an analytical review program enabling concurrent performance of analytical review procedures on client data as it is being processed through the automated system

 Application program examination:

When determining the extent to which they may rely on application controls, auditors need to consider the extent to which specified controls have been implemented correctly For example, where system amendments have occurred during an accounting period, the auditor would need assurance as to the existence of necessary controls both before and after the amendment The auditor may seek to obtain such assurance by using a software program to compare the controls in place prior to, and subsequent to, the amendment date

To summarize, the main objectives of the audit remain unchanged regardless

of whether it is performed in a manual or computer-based environment Of course, the audit approach, planning considerations and the techniques used to gather sufficient appropriate audit evidence must change According to S Anantha Sayana, CISA, CIA (2003) with "Using CAATs to Support IS Audit" published in Information Systems Control Journal, Volume 1, the author argues that CAATs have the role that With data volumes growing and management expectationson

assurances becoming more specific, random verifications and testing do not yield the desired value The use of auditsoftware ensures 100 percent scrutiny of transactions in which there is audit interest, and pointed identification andzeroing in

on erroneous/exceptional transactions, even when data volumes are huge And all this can be done in a fraction of the time required with manual methods

Another advantage of the audit software is the uniform user friendly interface that the audit software presents to the auditor for performing all the tasks, irrespective of the data formats or the underlying technology used by the application The audit software also maintains logs of the tests done for review by peers and seniors, and advanced features allow the programming of certain macros and routines that can further enhance audit speeds and efficiency

2.2.2 International standards for CAATs

Regarding traditional audit methods, auditors will build conclusions based on samples collected from accounting documents Auditors will use basic sampling techniques and conduct in accordance with instructions on specific audit programs and accepted accounting standards Regardless of the overall sample count or the number of transactions in a particular audit period, usually they can reach more than thousands of transactions, auditors only checks a few samples There is nothing wrong with these procedures, but with the advancement of technology today, this procedure can be in doubt With CAATs, auditors can perform more than 100% tests Instead of relying on samples, any significant anomalies can be detected using certain procedures and tests in CAATs Manual audits can be convenient for certain types of audits, especially when dealing with small clients with a small number of transactions during the period However, it may not be appropriate to extend this process to a number of complex audit procedures Chang et al (2011) mentioned that the need for a useful computer-based audit system, it has become important because manual audit cannot immediately recognize significant deviations by the use of a computer Prove that the use of CAATs is more effective for the development of a audit process than traditional manual audit