CAATTS ADOPTION IN MALAYSIAN BIG 4 AUDIT FIRMS

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RAVINDER KAUR A/P HARMINDER SINGH
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FACULTY OF BUSINESS AND ECONOMICS

UNIVERSITI MALAYA
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KUALA LUMPUR

2024
 CAATTS ADOPTION IN MALAYSIAN BIG 4 AUDIT FIRMS

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RAVINDER KAUR A/P HARMINDER SINGH

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DISSERTATION SUBMITTED IN PARTIAL FULFILMENT
OF THE REQUIREMENTS FOR THE DEGREE OF MASTER
OF ACCOUNTING (REPORTING AND MANAGEMENT
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ACCOUNTABILITY)
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FACULTY OF BUSINESS AND ECONOMICS

UNIVERSITI MALAYA
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KUALA LUMPUR

2024
 UNIVERSITI MALAYA
ORIGINAL LITERARY WORK DECLARATION

RAVINDER KAUR A/P

Name of Candidate: HARMINDER SINGH
Matric No: S2142579/1
Name of Degree: MASTER OF ACCOUNTING (REPORTING AND MANAGEMENT
ACCOUNTABILITY)
Title of Project Paper/Research Report/Dissertation/Thesis (“this Work”):
CAATTS ADOPTION IN MALAYSIAN BIG 4 AUDIT FIRMS

Field of Study:
BUSINESS AND ADMINISTRATION (ACCOUNTING AND TAXATION)

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I do solemnly and sincerely declare that:

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(1) I am the sole author/writer of this Work;
(2) This Work is original;
(3) Any use of any work in which copyright exists was done by way of fair dealing

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and for permitted purposes and any excerpt or extract from, or reference to or
reproduction of any copyright work has been disclosed expressly and
sufficiently and the title of the Work and its authorship have been
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acknowledged in this Work;
(4) I do not have any actual knowledge nor do I ought reasonably to know that the
making of this work constitutes an infringement of any copyright work;
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(5) I hereby assign all and every rights in the copyright to this Work to the
University of Malaya (“UM”), who henceforth shall be owner of the copyright
in this Work and that any reproduction or use in any form or by any means
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whatsoever is prohibited without the written consent of UM having been first

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had and obtained;

(6) I am fully aware that if in the course of making this Work I have infringed any
copyright whether intentionally or otherwise, I may be subject to legal action
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or any other action as may be determined by UM.

Candidate’s Signature: Date: 07/07/2024

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Subscribed and solemnly declared before,

Witness’s Signature Date: 8.7.24

Name:
Designation:

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 CAATTS ADOPTION IN MALAYSIAN BIG 4 AUDIT FIRMS

ABSTRACT

Technology has significantly revolutionised and altered countless businesses and facets

of life, and the auditing field is no exception. The advent of various tools and innovations

has transformed operational aspects and overall effectiveness within this crucial sector.

The audit industry is evolving, incorporating tools like Computer Assisted Audit Tools

and Techniques (CAATTs). However, the implementation of CAATTs in Malaysia is not

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as widespread and methodical as it could be, despite their potential to improve audit

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processes and outcomes. This study explores the adoption of CAATTs in Malaysian Big

4 audit firms using the Technology, Organization, and Environment (TOE) framework.

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It utilises a qualitative approach, featuring semi-structured in-depth interviews with
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diverse auditors from Malaysian Big 4 firms. This study reveals the use of both in-house

and commercially available CAATTs and various factors influencing their adoption. Key
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findings include the existence of technological divide, with younger auditors being
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savvier with newer tools. This research underscores the necessity for firms to adopt
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specific technological strategies and highlights the importance of managerial support in

managing the psychological demands related to CAATTs implementation. Focusing on

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Malaysia, this research enriches existing knowledge by understanding the changing

landscape of auditing in the age of digital transformation. It provides deeper insights

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through interview-based data collection, highlighting both the factors that motivate or

hamper the adoption of innovative audit technologies through the TOE framework, from

the perspectives of Big 4 audit firms.

Keywords: CAATTs, TOE framework, Adoption, Malaysian Big 4 audit firms, Interview

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 PENERIMAGUNAAN CAATTS DI FIRMA AUDIT 4 BESAR MALAYSIA

ABSTRAK

Teknologi telah merevolusikan dan mengubah banyak perniagaan dan aspek kehidupan

dengan ketara, dan bidang pengauditan tidak terkecuali. Kemunculan pelbagai alat dan

inovasi telah mengubah aspek operasi dan keberkesanan keseluruhan dalam sektor

penting ini. Industri audit sedang berkembang, menggabungkan alat seperti Alat dan

Teknik Audit Berbantu Komputer (CAATTs). Walaubagaimanapun, pelaksanaan CAATTs

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di Malaysia tidak begitu meluas dan berkaedah, walaupun ia berpotensi untuk menambah

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baik proses dan hasil audit. Kajian ini meneroka penggunaan CAATTs dalam firma audit

4 besar Malaysia menggunakan rangka kerja Teknologi, Organisasi dan Alam Sekitar

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(TOE). Ia menggunakan pendekatan kualitatif, menampilkan temubual mendalam separa
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berstruktur dengan pelbagai juruaudit daripada firma audit 4 besar Malaysia. Kajian ini

mendedahkan penggunaan CAATTs dalaman dan komersial serta pelbagai faktor yang
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mempengaruhi penerimagunaannya. Penemuan utama termasuk kewujudan jurang

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teknologi, dengan juruaudit yang lebih muda menjadi lebih arif dengan alat yang lebih
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baru. Penyelidikan ini menekankan keperluan firma untuk mengguna strategi teknologi

tertentu dan menyerlahkan kepentingan sokongan pengurusan dalam mengurus

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permintaan psikologi yang berkaitan dengan pelaksanaan CAATTs. Memfokuskan kepada

Malaysia, penyelidikan ini memperkayakan pengetahuan sedia ada dengan memahami

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perubahan landskap pengauditan dalam era transformasi digital. Ia memberikan

pandangan yang lebih mendalam melalui pengumpulan data berasaskan temubual,

mengetengahkan kedua-dua faktor yang mendorong atau menghalang penerimagunaan

teknologi audit inovatif melalui rangka kerja TOE, dari perspektif firma audit 4 besar.

Kata kunci: CAATTs, Kerangka TOE, Penerimagunaan, Firma audit besar 4 Malaysia,

Temu bual

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 ACKNOWLEDGEMENTS

I would like to express my heartfelt appreciation to the wonderful individuals who

provided assistance and support during my dissertation journey. Their contributions,

encouragement, constructive criticism, guidance, and motivation have been pivotal in

driving me to my current position throughout the entire process of completing my

dissertation.

First and foremost, this would not have been possible without the mentorship and

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guidance of my Supervisor, Dr Dayana Jalaludin. Without her valuable insights, unending

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patience, and constructive critiques, it would have been challenging to complete my

dissertation. She provided helpful feedback and intellectual inspiration, which motivated

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me to believe in myself. It is an honour to be her student.

Special appreciation is dedicated to my parents and siblings for their unwavering

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support and constant motivation. They consistently provided me with the strength and

determination I needed throughout this journey, which would have been significantly
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more challenging without their steadfast backing.

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Additionally, I am deeply grateful to all those who participated in this research

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and willingly shared their knowledge and stories with me. I recognize and thank the
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participants for their invaluable time, insights, opinions, and perspectives.

Last but not least, I wish to extend my gratitude to everyone who contributed to
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the success of my journey in any manner. I will forever cherish and be grateful for the

encouragement and support I received, whether directly or indirectly.

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 TABLE OF CONTENTS

ORIGINAL LITERARY WORK DECLARATION .................................................. ii

ABSTRACT ................................................................................................................... iii

ABSTRAK ...................................................................................................................... iv

ACKNOWLEDGEMENTS............................................................................................ v

TABLE OF CONTENTS ............................................................................................... vi

LIST OF FIGURES ....................................................................................................... xi

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LIST OF TABLES ........................................................................................................ xii

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LIST OF ABBREVIATIONS ..................................................................................... xiii

LIST OF APPENDICES ............................................................................................. xvi

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CHAPTER 1: INTRODUCTION .................................................................................. 1

1.1 Overview.................................................................................................................. 1
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1.2 Background of the Study ......................................................................................... 1

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1.2.1 Fourth Industrial Revolution (IR 4.0) in Malaysia ...................................... 2

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1.2.2 Audit Industry in Malaysia .......................................................................... 3

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1.2.3 Technology in Audit Industry ...................................................................... 4

1.3 Problem Statement ................................................................................................... 7

1.4 Research Objectives............................................................................................... 11

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1.5 Research Questions ................................................................................................ 11

1.6 Significance of the Study ....................................................................................... 11

1.7 Definition of Key Terms ........................................................................................ 13

1.7.1 Technology ................................................................................................ 13

1.7.2 Computer Assisted Audit Tools and Techniques (CAATTs) .................... 14

1.7.3 Big 4 ........................................................................................................... 14

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1.8 Organization of the Research................................................................................. 14

CHAPTER 2: LITERATURE REVIEW .................................................................... 16

2.1 Introduction............................................................................................................ 16

2.2 Industrial Revolution ............................................................................................. 16

2.2.1 Fourth Industrial Revolution (IR 4.0) ........................................................ 18

2.2.2 The Implication of Industrial Revolutions ................................................. 21

2.3 Auditing Industry in the Technological Era .......................................................... 25

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2.3.1 Imperatives for Technological Transformation in Auditing ...................... 25

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2.3.2 Audit Transformation in Big 4 Firms ........................................................ 27

2.4 Computer- Assisted Audit Tools and Techniques (CAATTs) .............................. 31

2.5
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Role of CAATTs in Auditing ................................................................................ 32
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2.6 Adoption of CAATTs ............................................................................................ 35

2.7 Summary ................................................................................................................ 38

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CHAPTER 3: CONCEPTUAL FRAMEWORK ....................................................... 39

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3.1 Introduction............................................................................................................ 39

3.2 Technology Adoption Theories ............................................................................. 39

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3.3 Technology, Organization and Environmental (TOE) Framework ....................... 40

3.3.1 Technological Context ............................................................................... 42

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3.3.2 Organizational Context .............................................................................. 43

3.3.3 Environmental Context .............................................................................. 44

3.4 Summary ................................................................................................................ 45

CHAPTER 4: RESEARCH METHODOLOGY ....................................................... 47

4.1 Introduction............................................................................................................ 47

4.2 Qualitative Approach ............................................................................................. 47

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4.3 Philosophical Underpinning .................................................................................. 49

4.4 Research Design .................................................................................................... 51

4.5 Data Collection ...................................................................................................... 52

4.5.1 Semi-structured Interview.......................................................................... 52

4.5.2 Selection of Interview Participants ............................................................ 55

4.5.2.1 Interview Participants Selection Criteria ..................................... 57

4.5.2.2 Interview Participants Information .............................................. 58

4.6 Ethical Consideration............................................................................................. 59

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4.7 Data Analysis ......................................................................................................... 60

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4.8 Summary ................................................................................................................ 63

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CHAPTER 5: FINDINGS ............................................................................................ 65
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5.1 Introduction............................................................................................................ 65

5.2 Background ............................................................................................................ 65

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5.3 The Evolution of Technology in Audit.................................................................. 67

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5.4 CAATTs Adoption in the Big 4 ............................................................................ 70

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5.4.1 Diversity of CAATTs Utilization .............................................................. 73

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5.4.2 In-house vs Commercial Tools .................................................................. 75

5.5 Financial Resources ............................................................................................... 77

5.6 Skills and Training Requirement ........................................................................... 78

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5.7 Client Expectations ................................................................................................ 83

5.8 Psychological Aspect ............................................................................................. 84

5.9 Societal Expectations ............................................................................................. 86

5.10 Regulatory Requirement ........................................................................................ 87

5.11 Future Direction on CAATTs Adoption ................................................................ 89

5.12 Summary ................................................................................................................ 91

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CHAPTER 6: DISCUSSION AND CONCLUSION.................................................. 92

6.1 Introduction............................................................................................................ 92

6.1 Big 4 CAATTs Adoption Context ......................................................................... 92

6.2 Big 4 CAATTs Adoption Factors .......................................................................... 96

6.2.1 Technological Context ............................................................................... 97

6.2.1.1 Availability .................................................................................. 98

6.2.1.2 Complexity .................................................................................. 99

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6.2.1.3 Relevance and Fit ...................................................................... 100

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6.2.1.4 Compatibility with Client System ............................................. 102

6.2.2 Organizational Context ............................................................................ 103

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6.2.2.1 Management Support and Commitment .................................... 103
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6.2.2.2 Financial resources .................................................................... 105

6.2.2.3 Auditor IT Competency and Skills ............................................ 106

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6.2.2.4 Auditor Willingness and Attitude .............................................. 109

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6.2.2.5 Auditor Age ............................................................................... 110

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6.2.3 Environmental Context ............................................................................ 111

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6.2.3.1 Regulatory Requirement ............................................................ 111

6.2.3.2 Client Size.................................................................................. 113

6.2.3.3 External Pressure ....................................................................... 114

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6.3 Contributions of the Study ................................................................................... 115

6.4 Limitations of the Study ...................................................................................... 118

6.5 Suggestions for Future Research ......................................................................... 119

6.6 Conclusion ........................................................................................................... 120

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REFERENCES ............................................................................................................ 122

APPENDICES ............................................................................................................. 140

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 LIST OF FIGURES

Figure 1.1: Nine inter-related pillars of Industrial Revolution 4.0 ................................... 3

Figure 1.2: Current use of technology .............................................................................. 5

Figure 1.3: Technology trends affecting the accounting profession ................................. 6

Figure 2.1: Chronology of the Industrial Revolutions .................................................... 17

Figure 2.2: Implementation of emerging technology ...................................................... 21

Figure 2.3: Technology adopted due to the pandemic .................................................... 30

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Figure 3.1: TOE framework ............................................................................................ 41

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Figure 3.2: Proposed TOE conceptual framework .......................................................... 46

Figure 4.1: Qualitative research process employed ........................................................ 64

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Figure 6.1: Adapted Framework ..................................................................................... 96
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Figure 6.2: Annual budget allocation for technology adoption .................................... 105

Figure 6.3: Evolving skills of auditors .......................................................................... 108

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 LIST OF TABLES

Table 2.1: IR 4.0 technologies ........................................................................................ 19

Table 6.1: Context of CAATTs used by the Big 4 audit firms ....................................... 93

Table 6.2: Context of CAATTs usage in line with ISA .................................................. 95

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 LIST OF ABBREVIATIONS

1MDB 1Malaysia Development Berhad

3D Three-dimensional

AASB Auditing and Assurance Standard Board

ACCA Association of Chartered Certified Accountants

ACL Audit Command Language

AI Artificial Intelligence

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AICPA American Institute of Certified Public Accountants

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AOB Audit Oversight Board

AR Augmented Reality

ASA

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Australian Auditing Standards
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BIG 4 Referring to the four largest audit firms

BDA Big Data Analytics

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CAATTs Computer Assisted Audit Tools and Techniques

COVID-19 Coronavirus Disease

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CPA Certified Public Accountant

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CPS Cyber-Physical Systems

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DA Data Analytics

DOI Diffusion of Innovation

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ERP Enterprise Resource Planning

EY Ernst & Young

FRC Financial Reporting Council

GAS Generalized Audit Software

IAASB International Auditing and Assurance Standards Board

ICT Information and Communications Technology

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 IDEA Interactive Data Extraction and Analysis

IFAC International Standards of Auditing

IMF International Monetary Fund

INDUSTRY 4.0 Fourth Industrial Revolution

IoT Internet of Things

IR 4.0 Fourth Industrial Revolution

ISA International Standards on Auditing

IT Information Technology

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ITF Integrated Test Facility

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KPMG Klynveld Peat Marwick Goerdeler

MIA Malaysian Institute of Accountants

ML
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Machine Learning
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MOSTI Ministry of Science, Technology, and Innovation

NLP Natural Language Processing

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PwC PricewaterhouseCoopers
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RPA Robotic Process Automation

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SAS Statement of Auditing Standard

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SAS Statistical Analysis Software

SME Small and Medium Enterprises

SQL Structured Query Language

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SSM Suruhanjaya Syarikat Malaysia

TAM Technology Acceptance Model

TOE Technology, Organization and Environmental

UK United Kingdom

UMREC University of Malaya Research Ethics Committee

US United States

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 UTAUT Unified Theory of Acceptance and Use of Technology

VR Virtual Reality

WEF World Economic Forum

WSJ Wall Street Journal

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 LIST OF APPENDICES

Appendix A Semi-structured Interview Guide and Justification

Appendix B Participants Demographic Information

Appendix C Categorization of Adoption Factors

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 1. CHAPTER 1: INTRODUCTION

1.1 Overview

This chapter provides a general introduction to the study by describing its structure and

background. It begins with a brief discussion on the Fourth Industrial Revolution (IR 4.0),

followed by the overview of the audit industry in Malaysia and technology used by the

profession in the country respectively. Next, the problem statement is presented, followed

by the research objectives, research questions and the significance of the study. Finally,

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this chapter defines the key terms used in this study and outlines the contents of the

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remaining chapters of this dissertation.

1.2 Background of the Study

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Following the technological advances and the unprecedented pace of digitalisation due to
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the advent of the Fourth Industrial Revolution (IR 4.0), industries worldwide have seen

substantial changes in their operations (MIA, 2018). This is because the business
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environment is evolving quickly in tandem with the technological advancements

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(Ammirato et al., 2023; Deloitte, 2016; Enzmann & Moesli, 2022; Nikou et al., 2022).
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Accordingly, that has also led to changes in the auditing landscape and the future of the

auditing profession (Deloitte, 2016).

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In the audit industry, Computer- Assisted Audit Tools and Techniques (CAATTs)

is slowly becoming important (Ghani, 2016). Generally, CAATTs refers to any use of
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technology to facilitate the execution of an audit (Bierstaker et al., 2014; Braun & Davis,

2003). While most audit firms have realised the importance of using audit tools, analytics,

and technology, CAATTs are not as widespread as they can be (Gepp et al., 2018;

Mazlina & Lai, 2017; MIA, 2018, 2023; Rosli et al., 2013; Siew et al., 2020; Widuri et

al., 2016).

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 Using a qualitative approach, this study aims to analyse (1) the various types of

CAATTs being adopted by Malaysian Big 4 firms in practice and the context of its usage;

and (2) the factors that influences the adoption of CAATTs in the Big 4 audit firms. This

study presents an in-depth analysis of the factors that affecting the adoption of CAATTs

using the Technology, Organization and Environment (TOE) framework.

1.2.1 Fourth Industrial Revolution (IR 4.0) in Malaysia

The world is currently moving towards the Fourth Industrial Revolution (IR 4.0), despite

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the fact that the first three, being the era of science and mass production, the development

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of the steam engine, and the emergence of digital technology, were also pivotal in creating

our contemporary society. According to a World Economic Forum article by Klaus

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Schwab, the Fourth Industrial Revolution is indeed an extension and development of the

Third Industrial Revolution. However, it is not merely a continuation; rather, it marks the
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beginning of a new era with a unique velocity, scope, and systemic impact as a whole

(WEF, 2016). Technology has become fully integrated into our daily lives as a result of
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these revolutions (Enzmann & Moesli, 2022).

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IR 4.0 is characterized by various innovative technologies that fuse digital,

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biological, and physical language affecting all fields, economies, and sectors (MIA, 2018).
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Figure 1.1 below shows the nine inter-related pillars of IR 4.0 as reflected by Malaysian

Institute of Accountants (MIA) in the MIA Digital Technology Blueprint report (MIA,
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2018). These technologies have the potential to revolutionise many industries, including

but not limited to the manufacturing, services, professional sports, retail, and financial

services, among others (Ammirato et al., 2023; Deloitte, 2016; Enzmann & Moesli, 2022;

Nikou et al., 2022). The quick development of various types of technology and the

widespread use of information systems in businesses has also proliferated the audit

profession and is further reshaping how audits are being conducted (Ghani, 2016). As a

result, new audit tools, technologies and methodologies are being introduced, pushing the

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audit industry towards more sophisticated, effective, efficient and comprehensive

practices (Deloitte, 2017). Audit firms should seize the opportunity to thrive by

leveraging innovation to gain a broader competitive edge (Tarek et al., 2017).

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Figure 1.1: Nine inter-related pillars of Industrial Revolution 4.0

Source: MIA (2018)

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1.2.2 Audit Industry in Malaysia

The audit sector is a global industry that offers clients expert services for the audit of
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financial statements, assurance, tax services, and other audit services (Thottoli et al.,

2022). It has undergone numerous transformations due to economic turndowns, mergers,

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frauds, technological advancements (Alharasis et al., 2023; Carlin et al., 2009; Liew et

al., 2022), as well as the recent COVID-19 pandemic (IMF, 2023; MIA, 2023).

The Malaysian audit market is said to exhibit behaviour best described as an

oligopoly structure. Over time, there has been evidence that the large firms known as the

“Big 4” firms, i.e., PricewaterhouseCoopers (PwC), Deloitte Touche Tohmatsu (Deloitte),

Ernst & Young (EY) and Klynveld Peat Marwick Goerdeler (KPMG), are now the

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remaining top players in the audit market (Abidin & Mohamad-Nor, 2015; FRC, 2021;

Ishak et al., 2013; Raza et al., 2019).

These leading firms collectively control a significant portion of the market,

shaping the overall dynamics of the audit industry in Malaysia. In line with IR 4.0, which

has altered various aspects of businesses (David et al., 2022; Dubey et al., 2022; MOSTI,

2018; Shahbakhsh et al., 2022; Vaidya et al., 2018; Yunos & Din, 2019), the Big 4 audit

firms strive to maintain a competitive advantage with the resources and capabilities they

possess (Tarek et al., 2017).

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1.2.3 Technology in Audit Industry

To stay up-to-date with the revolution, dynamic audits are required (Liew et al., 2022;

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Tarek et al., 2017). A dynamic audit is understood as the employment of cutting-edge

data analytics and technology to analyse large quantities of data, delve deeper, and
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produce an audit outcome that meets high standards (KPMG, 2016). These technologies,

when paired with the expertise and experience of auditors, enable the audit profession to
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transition from its history of labour-intensive manual processes and disjointed audit tools,
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towards a more streamlined and efficient approach. This shift allows audit teams to focus
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on the most important aspects of the audit, producing deeper insights and fostering more
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meaningful client conversations (AICPA, 2023; KPMG, 2016).

These developments are transforming audits, especially when combined with

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other significant factors such as authoritative guidelines and standards, workforce

retention and upskilling, and evolving audit techniques (AICPA, 2023). Nowadays, the

audit industry is slowly seeing the use of Computer Assisted Audit Tools and Techniques

(CAATTs) (Ahmi & Kent, 2012; Al-Okaily et al., 2022; Kim et al., 2016; Shihab et al.,

2017; Siew et al., 2020; Thottoli et al., 2022). Generally, CAATTs are perceived as the

use of any type of technology to conduct audits (Braun & Davis, 2003). Traditional audit

procedures are being revolutionised by CAATTs, including audit software, artificial

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intelligence (AI), machine learning (ML), data analytics (DA), cognitive technology,

blockchain, and cloud applications, among others (McKinsey, 2020; MIA, 2018).

Based on a survey conducted in 2019 by MIA, respondents indicated that tools

such as Microsoft applications (almost 100% reported use), accounting software (over 90%

reported use) and cloud applications (about 60% reported use) were used most

pervasively. This contrasts with data analytics tools (over 40% reported use) and audit

software and artificial intelligence, which were used slightly above 20% respectively

(MIA, 2020), as shown in Figure 1.2.

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Figure 1.2: Current use of technology

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Source: MIA (2020)

A similar survey was conducted by MIA in 2022 (MIA, 2023). The results of the

survey indicated that the top five technologies adopted are video conferencing and group

collaboration tools, Microsoft applications, cloud applications, accounting software, and

data analytics. This is consistent with the results of the McKinsey Global Survey, which

showed that the pandemic has indeed accelerated the adoption of digital tools and

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techniques worldwide by several years (McKinsey, 2020). This change is necessary as it

improves the quality and dependability of audits, giving auditors greater insights into

financial records, and enables them to handle larger volumes of data more effectively.

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Figure 1.3: Technology trends affecting the accounting profession
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Source: MIA (2023)

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Additionally, over the years, automation and big data and analytics have slowly
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seen increased adoption (Figure 1.3). Overall, CAATTs change the way data is collected,

analysed, used, and even stored, reflecting effectiveness and efficiency. By eliminating
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manual labour and minimising errors, digital tools and techniques can automatically

extract data from a variety of sources, including databases, accounting software, and
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enterprise resource planning (ERP) systems (Moll & Yigitbasioglu, 2019). They can also

analyse unstructured data to gain a greater understanding of potential hazards and areas

of concern (De Santis & D’Onza, 2021).

With the use of strong technological tools like artificial intelligence, machine

learning, and data analytics, CAATTs enable auditors to spot patterns, trends, and

anomalies that might otherwise go unnoticed with conventional techniques (Ferri et al.,

2021). Subsequently, decisions can be made more intelligently because data-driven

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 insights obtained from CAATTs offer valuable information for risk assessment, audit

planning, and reporting. These tools can be used for various purposes throughout the audit

process (Abdennadher et al., 2022).

1.3 Problem Statement

Technology is essential for the audit profession, but research shows Malaysia has low

technology utilisation and adoption among auditors (Rosli et al., 2013; Zuraidah et al.,

2022). A study by Widuri et al. (2016), focusing on CAATTs adoption, revealed that only

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43% of Malaysian auditors utilized advanced data analytics tools in their audits.

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Additionally, the Technology Adoption by the Accountancy Profession Survey 2022

highlighted information about the level of technology acceptance and use among auditors

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in Malaysia. The poll indicated that although Malaysian auditors are becoming more

aware of and receptive to technologies such as fintech and cloud apps, certain obstacles
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to adoption and implementation continue to exist (MIA, 2023).

Audit standards advocate that the use of CAATTs improves audit effectiveness
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and efficiency (AASB, 2006; AICPA, 2007; Bierstaker et al., 2014). The ASA 240 issued
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by the Auditing and Assurance Standards Board states that auditors should use CAATTs
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when conducting an audit in a technology-based environment (AASB, 2006). Countries

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like the United States (US) have made using audit technology mandatory to improve audit

quality (Widuri et al., 2016). According to the American Institute of Certified Public
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Accountants (AICPA)’s US Statement of Auditing Standard (SAS) No. 316.52, auditors

“need to employ computer-assisted audit techniques to gather more evidence about data

containing insignificant accounts or electronic transaction files” (AICPA, 2007).

Anecdotal evidence suggests that the Big 4 audit firms are applying technological

tools and approaches in practise, but a survey by Gepp et al. (2018) reveals that CAATTs

are still being underutilised (Debreceny et al., 2005; Siew et al., 2020), especially in

developing countries, such as Malaysia (Mazlina & Lai, 2017; Omonuk, 2015; Rosli et

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