Hype or Hope: Digital Technologies in Auditing Process

Hype or Hope: Digital Technologies in

Auditing Process

Mohamad Hesham Adnan Allbabidi*

ABSTRACT
Manuscript type: Research paper
Research aims: This study aims to examine how technological,
organisational and environmental (TOE) factors affect digital
technologies’ utilisation and its impact on auditors’ performance.
Design/Methodology/Approach: A survey was conducted on 4 large
and non-large companies in Jordan, and data were retrieved from
168 external auditors. The partial least squares (PLS-3) structural
equations modeling was used to analyse data and to test the proposed
model.
Research findings: Results show that the TOE factors have a signifi-
cant and positive effect on digital technologies utilisation. It also
appears to enhance auditors’ performance.
Theoretical contribution/Originality: This study fills a gap in the
literature of accounting by empirically assessing how digital tech-
nologies utilisation impacts the performance of auditors in Jordan.
It also expands on previous literature by determining how the
TOE factors affect such technology usage in the auditing process.
This study also has a methodological contribution in the form of
measuring the client’s complexity of IT system from a different
perspective, which is from the external auditor’s perspective.
Practitioner/Policy implications: This study is expected to help regu-
lators and audit companies to update their policies and regulations so
that auditors are trained in using advanced technologies, and in pro-
tecting the security of accounting information. In this regard, efficient

* Mohamad Hesham Adnan Allbabidi is an Assistant Professor at the Department of

Accounting, Al-Salt College for Human Sciences, Al-Balqa Applied University, 19117, Salt,
Jordan. Email: [email protected]

https://doi.org/10.22452/ajba.vol14no1.3

Asian Journal of Business and Accounting 14(1), 2021 59

 Mohamad Hesham Adnan Allbabidi

auditors will be able to protect investors, thereby creating an attractive

environment for investment which can boost economic growth.
Research limitation/Implications: This study is based on the Jor-
danian context. There was no comparison made with developing or
developed countries, hence no distinctions can be detected. Future
studies should focus on looking at other countries so as to provide
new insights into the auditing profession, and specifically, auditors’
performance. Finally, this study is a practical guide for external and
internal auditors who have not considered digital technologies, in the
context of Jordan. Future studies may thus consider internal auditors
and their relationship with external auditors in digital technologies
utilisation.

Keywords: Technological, Organisational and Environmental Factors,

Auditors’ Performance, Digital Technologies
JEL Classification: M42

1. Introduction
To date, the use of digital technologies has become increasingly im-
portant as it paves the way for investors to make effective and efficient
business decisions, (Handoko et al., 2018). Companies invest in digital
technologies so as to improve their operational performance and their
financial reporting quality (Wicaksono & Lusianah, 2016). Further to this,
Bierstaker et al. (2014) also mentioned that digital technology is a very
useful tool for external auditors who can use it to perform their audit
duties more efficiently, especially in a big data environment. In a more
recent study, Cristea (2020) and Lee and Tajudeen (2020) observed that
artificial intelligence to automate the traditional data analysis process,
which includes collecting and preparing audit data, copying and
transposing information between the database/software (e.g., SAP) and
tools (e.g., Microsoft Excel), organising the information based on several
selection criteria, integrating manual notes, and running basic tests.
All of these processes have enhanced the auditing process very much,
and this implies that technology advancement can facilitate auditors’
performance. It helps to make the auditors’ tasks more effective and
efficient, for instance, in ensuring the internal control of the auditees, in
accessing documents and records, and in producing information, when
compared to their manual auditing approach. Although many businesses
have moved towards using sophisticated IT-based environments, auditor
readiness and progress in this regard has been slow (Bierstaker et al.,

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 Hype or Hope: Digital Technologies in Auditing Process

2014). At the same time, IT audits in developing countries is still at the

minimum level (Mansour, 2016; Ismail & Abidin, 2009). This implies
that some companies may be experiencing some disadvantages. Several
researchers such as Al-Ansi (2015) and Gibran (2010), argued that ex-
ternal auditors should bear part of the responsibilities for companies’
bankruptcy and their business failures. This is because stakeholders
expect auditors to provide credible and quality information. One of the
ways to meet these increasing demands is by using audit technologies
which can assist auditors in detecting false penetrations and frauds
more efficiently (Bierstaker et al., 2014; International Federation of
Accountants, 2019), thereby improving auditors’ performance (Interna-
tional Accounting Education Standards Board, 2014).
In the context of Jordan, computerised accounting information
systems used by companies and banks had helped to expose instances
of electronic penetration and hacking (Mansour, 2016). Cases of credit
cards issued by Jordanian banks being hacked had also occurred, in-
volving at least 500 Visa credit cards which had led to a loss of 5 million
JD (Central Bank of Jordan, 2018). This crisis raised some ambiguities
about the performance of Jordanian external auditors. There is thus, an
urgent need to develop a deliberate study which can address this issue.
Endorsements have been made by Marie (2015), and Al-Hanini (2009),
who had proposed that external auditors need to keep up to date with
the changes that have occurred in Jordanian IT, which is currently being
utilised as a tool in the field of accounting. The scholars maintained that
external auditors need to include IT into their system so as to improve
their performance.
The effects of technological factors (Handoko et al., 2018; Al-Ansi,
2015), and organisational factors (Bierstaker et al., 2014; Wicaksono
& Lusianah, 2016; Curtis & Payne, 2014) on digital technologies’
utilisation have been examined previously. Although these studies
provided some insights into the adoption and usage of technology in
auditing, there were some limitations in terms of environmental factors.
Thus several scholars (Marie, 2015; Mansour, 2016; Lim-u-sanno &
Ussahawanitchakit, 2009) highlighted the need for studies to integrate
the environmental factors into their investigations. It was argued that
the influence of professional bodies, as an environmental factor, cannot
be neglected within the auditing context (Mansour, 2016; Lim-u-sanno &
Ussahawanitchakit, 2009).
Statutory guidelines derived from auditors’ association of profes-
sional bodies have stated that digital technology is important. However,

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 Mohamad Hesham Adnan Allbabidi

even though these professional bodies may serve as the legal body to
raise auditing standards, its importance as an environmental factor
has not been much examined. Further to this, past studies have also
overlooked the impact of digital technologies on auditors’ performance.
Given the limitations of previous studies, there is thus a need to conduct
a study, particularly within the context of Jordan as a developing
country, to examine how these two factors are interrelated. To date, the
audit profession in Jordan is also facing many difficulties which could
be enhanced by more research focusing on information technology
auditing (Mansour, 2016; Al-Hanini, 2009). Past studies have mainly
focused on western countries which are typically characterised by their
individualistic culture, hence the current study aims to examine the
context of an Arabic community that possesses a collectivistic culture
where its social life is more dominating than its private life (Marie, 2015).
In this regard, Jordan serves as an interesting setting.
This study addresses the gap identified in existing accounting
literature by empirically assessing the impact of TOE factors on digital
technologies’ utilisation and its impact on auditors’ performance, in
the context of Jordan. This study also makes a methodological con-
tribution by measuring the companies’ complexity of IT system, from
the perspective of the external auditors. The findings of this study are
expected to enable regulators and audit firms to update their policies
and regulations so that auditors can be mandatorily trained in the use of
advanced technologies which can then enhance their performance. The
auditors’ efficiency would then be able to offer protection to investors,
thereby creating an attractive environment for boosting the overall
economic growth.
This paper is organised in the following manner: Section 2 discusses
the literature review and hypotheses development. Section 3 explains
the methodology. Section 4 reports on the findings, Section 5 focusses
on the discussions and Section 6 concentrates on the implications and
limitations of the study.

2. Literature Review
2.1 Auditor Performance
Auditor performance is defined as the total expected values offered,
and the behaviours conducted by auditors. Recent financial crises have
highlighted old and new questions concerning auditors’ performance,

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 Hype or Hope: Digital Technologies in Auditing Process

which point to the credibility of financial statements prepared by

auditors. Traditionalists contend that external audits contribute to the
credibility of financial statements because auditors are trained to be
insightful; they also possess the knowledge that can be used to curtail
poor management as well as to facilitate the production of accurate
information (Handoko et al., 2018; Sikka, 2009). In relation to this,
Curtis and Payne (2014) emphasised that improving audit performance
is of particular importance in today’s audit environment that is charac-
terised by increased responsibilities and workloads, especially fraud
detections. This task is especially mandated by SAS No. 99, which states
that suboptimal performance, particularly in situations where task
complexity exceeds individual skills and experience, can be improved.
Technological advancement, to some extent, has disrupted the audit
profession as auditing firms strive to keep abreast with the technologies.
The adoption of new and smart technologies can lead to improvements
in many aspects of the professions’ quality, hence it is vital to implement
the technology. Since mid-2000, there has been a marked increase
in the introduction of technologies. This has impacted auditors’ role
and profession (La Torre et al., 2018; Kozlowski, 2018). Techniques
such as continuous auditing and computer assisted audit techniques
(CAATs) require that auditors adopt advanced electronic environments
(Lamboglia & D’Onza, 2014; Curtis & Payne, 2014; Braun & Davis, 2003).
Despite the relevant effects and widespread diffusion of technology in
auditing, these issues seem to be under-researched. While literature
on digital technologies is vast, ranging from engineering to a wide set
of applications in many areas of research, research examining their
applications in the audit profession is far in between (Issa et al., 2016).

2.2 Theory of Technology-Organisation-Environment (TOE)

In examining the technological, organisation, and environment factors
that may influence the performance of the Jordanian external auditors,
this study employs the theory of technology-organisation-environment
(TOE) as a framework. Developed by Tornatzky and Fleisher (1990)
for the purpose of analysing information technology adoption by
companies, the TOE is a technology acceptance model. Using this
framework, Tornatzky and Fleisher (1990) was able to identify the
factors that influenced technology adoption among companies. The
first of these, the technological context describes both the external and
internal technologies relevant to a company. This includes current firm

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 Mohamad Hesham Adnan Allbabidi

practices (Lin & Lin, 2008) as well as the available external technologies
(Pan & Jang, 2008). The second, organisational context, refers to
the organisation’s scope, managerial structure and size (Oliveira &
Martins, 2008), and finally, the environmental context refers to how
the organisation conducts its businesses which comprise the nature of
the industry, government dealings and its competitors (Tornatzky &
Fleischer, 1990).
The TOE framework serves as a useful analytical structure for
examining the adoption and assimilation of different information
technology innovations. The TOE framework has a consistent empirical
support, a solid theoretical basis, and various potential applications
in information system innovations (Awa et al., 2015). However, some
specific factors may vary across different studies. Based on the TOE
theory, this study incorporates three factors, namely the technological
factors, organisational factors and environmental factors, which are
deemed to influence digital technologies’ utilisation among companies.

2.2.1 Technological Factors

The technological factors are evaluated based on three dimensions – IT
knowledge, IT cognitive style and IT self-efficacy. IT knowledge refers
to the individual’s ability to describe the conceptual or theoretical aspect
of the technology (International Federation of Accountants, 2019). It
is deduced that auditors’ computer knowledge would enhance their
positive perceptions on digital technologies (Mansour, 2016). It appears
that users who have IT knowledge tend to develop positive experiences
when using the system. Thus, they are more likely to utilise the system
in the future. They also tend to have the confidence that using digital
technologies could facilitate their performance in their auditing tasks,
thereby leading to higher utilisation (Wicaksono & Lusianah, 2016; Al-
Ansi, 2015). Based on these arguments, the following hypothesis was
formulated:
H1a: IT knowledge has a positive effect on digital technologies’
utilisation.
Results from prior studies have shown that IT cognitive styles can
affect the individual’s decision-making and behaviour, significantly
(Chakraborty et al., 2008; Handoko et al., 2018; Marie, 2015). Cognitive
style is defined by Messick (1976, p. 4) as “stable attitudes, preferences
or habitual strategies that determine individuals’ modes of perceiving,

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 Hype or Hope: Digital Technologies in Auditing Process

remembering, thinking and problem solving”. It has been noted that

cognitive style can significantly and positively impact on the individual’s
perception of IT importance (Chakraborty et al., 2008). Individuals who
perceive that new technologies can be useful, and are easy to use, tend to
increase IT utilisation, and past studies seemed to show consistency. For
instance, Al-Ansi (2015) found that cognitive style positively influenced
the individuals’ perceived IT importance and utilisation. Based on the
above, the following hypothesis was formulated:
H1b: IT cognitive style has a positive effect on digital technologies’
utilisation.
Self-efficacy refers to the person’s belief in his/her own capability
and ability to organise and execute a course of action so as to produce
a desired outcome (Bandura, 1997). Within the context of technology,
individuals with high self-efficacy tend to be more confident in using
the tools; they enjoy the usage, and they experience less anxiety about
using them (Chakraborty et al., 2008). This argument was also endorsed
by Mansour (2016) who mentioned that self-efficacy can influence
performance expectations. Likewise, Wicaksono and Lusianah, (2016)
deduced that self-efficacy has a significant impact on IT utilisation. Based
on the above arguments, the following hypothesis was thus formulated:
H1c: IT self-efficacy has a positive effect on digital technologies’
utilisation.

2.2.2 Organisational Factors

In this study, the organisational factors were evaluated based on three
dimensions, which include management support, IT training and IT
facilitating resources. Management support is defined as the perceived
level of general support offered by senior executives and decision makers
(Igbaria et al., 1997). The active involvement of management increases
the strategic importance of the technology usage (Ahmi & Kent, 2013).
Without the support of the management, technology development could
not be manifested across organisations because it requires substantial
financial resources. Within the context of auditing, Curtis and Payne
(2014) found that management support leads to increased IT usage.
Based on this, the following hypothesis was thus proposed:
H2a: IT management support has a positive effect on digital
technologies’ utilisation.

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 Mohamad Hesham Adnan Allbabidi

With the development of information technology, devices are being

introduced more rapidly into the market. This also leads to organisations
investing in financial resources so as to acquire the latest available
technology. Despite this, technologies are being under-utilised mainly
because of the employees’ incapability to use them. This phenomenon
suggests the importance of IT training so as to optimise technology
usage (Yi & Davis, 2001). IT training helps employees to update their
skills, and to reduce their anxiety towards technology adoption, thereby
leading to high utilisation. In the auditing context, studies done by
Al-Ansi (2015), Mansour (2016), and Handoko et al. (2018) found a
positive relationship between IT training and IT utilisation. Given these
arguments, the following hypothesis was thus formulated:
H2b: IT training has a positive effect on digital technologies’
utilisation.
Curtis and Payne (2014), and Ahmi and Kent (2013) found that IT
usage can be hindered by the limited access to hardware and software
facilities. This means that the individual’s perception of control over
the use of technology is influenced by the available IT facilitating
resources. Venkatesh et al. (2003, p. 453) defined IT facilitating resources
as “the degree to which an individual believes that an organisational
and technical infrastructure exists to support use of the system”. In the
auditing context, auditors are more likely to use technologies like the
CAAT, if they believe that the organisation provides them with the
necessary IT support (Bierstaker et al., 2014). Based on these arguments,
it is thus expected that IT facilitating resources would positively affect
digital technologies utilisation; hence the following hypothesis was
formulated:
H2c: IT facilitating resources have a positive effect on digital
technologies’ utilisation.

2.2.3 Environmental Factors

In this study, the environmental factors were evaluated based on
complexity of clients’ IT system, their competitive pressure, and the
regulations imposed by professional bodies. Control risk may influence
computer-related audit procedures when examining clients with complex
IT system (American Institute of Certified Public Accountants, 2012). For
example, SAS No. 94 cautions auditors that determining control risks

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 Hype or Hope: Digital Technologies in Auditing Process

at maximum level, and relying only on testing as a procedure, may not

be sufficiently effective for clients with complex IT systems. Moreover,
professional standards suggest that auditors should consider control
risks during planning, when examining clients with complex IT systems
(American Institute of Certified Public Accountants, 2011). Al-Ansi et
al. (2013) also agreed with Al-Kharbi (2010) that if external auditors
were not updated in terms of the IT usage, they would be unable to
cope with other challenges being imposed by the technology-driven
business environment. In support of that, Marie (2015) asserted that
those interested in the audit profession are well aware of the gap existing
between the actual practice of auditors, and the improvements noted
in the IT-related auditing profession. Based on this, it is thus expected
that the complexity of client’s system has a positive influence on their IT
utilisation. Hence, the following hypothesis was proposed:
H3a: Perceived complexity of clients’ IT system has a positive effect
on digital technologies’ utilisation.
Recent audit-market pressures have led to radical changes in the
audit methodologies of some audit companies (Mansour, 2016). To
increase both the audit effectiveness and its value to clients, audit firms
are persuaded to adopt new technologies (Berberich, 2005). More than
a few regulators and researchers have raised concerns about the ability
of small audit companies in competing with larger companies in the IT
environment (Handoko et al., 2018). This shows that competition drives
the auditing firms to consider technology investment so as to maintain
their competitiveness. Companies’ adoption of advanced technologies
may enable these auditing firms to leverage on newer and more efficient
ways of auditing, hence the ability to outperform their rivals. The
utilisation of the state-of-the-art technologies would help such auditing
firms to position themselves as a leading-edge auditing firm. Based on
this, it is expected that competitive pressure has a positive influence
on digital technologies’ utilisation. Thus, the following hypothesis was
formulated:
H3b: Competitive pressure has a positive effect on digital technolo-
gies’ utilisation.
Professional bodies are sources for helping members to remain
well-informed, and to sustain their relevance. They also ensure
that members conform to international professional standards and
practices (American Institute of Certified Public Accountants, 2012).

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 Mohamad Hesham Adnan Allbabidi

Undoubtedly, regulations and laws related to IT increase the awareness

of IT importance among auditors (International Accounting Education
Standards Board, 2014; International Federation of Accountants, 2019).
Prior literature (Curtis & Payne, 2014; Al-Ansi, 2015; Wicaksono &
Lusianah, 2016) has highlighted the relationship between professional
associations and technology adoption. It is deemed that auditors’ accep-
tance of IT would increase if they are encouraged by their professional
associations to adopt these audit technologies. Based on this, it is
therefore deduced that regulations done by professional bodies have a
positive influence on auditors’ digital technologies utilisation. Based on
the above, the following hypothesis was formulated:

H3c: Regulations of professional bodies have a positive effect on

digital technologies’ utilisation.

2.2.4 Digital Technologies’ Utilisation and Auditors’ Performance

The effective use of IT generates innovations; it can also help firms
to redesign their business processes, which, together with positive
dynamics, can subsequently lead to enhanced performance (Handoko
et al., 2018). IT utilisation can influence business performance in several
ways such as: 1) by altering richness perceptions of IT importance;
and 2) by affecting performance, that is, to improve the efficiency and
effectiveness of businesses (Wicaksono & Lusianah, 2016). Auditing
standards proposed by associations have also stated that IT utilisation
may improve audit performance (Bierstaker et al., 2014). Interestingly,
auditors had previously indicated that IT utilisation is important for
several applications (audit planning, risk assessment, internal control
evaluation, client acceptance, client relationship management, and
fraud review) (Mansour, 2016). IT utilisation is equally important
because audit technologies make it possible for auditors to improve their
performance (Al-Ansi, 2015). Therefore, it is believed that IT utilisation
would have a positive influence on auditors’ performance. Based on this,
the following hypothesis was formulated:

H4: Digital technologies’ utilisation has a significant and positive

effect on auditors’ performance.

Based on the literature review, and the formulated hypotheses, a re-

search framework was thus developed for this study. Figure 1 illustrates.

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 Hype or Hope: Digital Technologies in Auditing Process

Technological Factors
IT knowledge
IT cognitive style H1a – H1c
IT self-efficacy

Organisational Factors Digital Auditors’

H4
IT Management support H2a – H2c technologies’ performance
IT training utilisation
IT facilitating resources

Environmental Factors
Complexity of client’s IT
system H3a – H3c
Competitive pressure
Regulation of
professional bodies

Figure 1: Research Framework

3. Methodology
This study employs a quantitative approach based on a survey question-
naire which was used to test the research hypotheses. The research
population for this study comprised Jordanian auditors of various
ranks, including audit partners, audit senior managers, audit managers,
senior auditors, junior auditors, audit trainees, or other equivalent
positions. The questionnaire was pilot tested with 40 respondents from
4 large and non-large companies. Based on the 32 responses received,
the inconsistencies of wording, and unclear or ambiguous items listed in
the questionnaire were refined. According to the Jordanian Association
of Certified Public Accountants (2019), the total population of Jordanian
external auditors are, of date, 360. Using the rand () function noted in MS
Excel, random numbers were then generated. These were first sorted,
and then selected, from the 186 external auditors who represented 4 large
and non-large companies. Prior to the questionnaire distribution, formal
approval was acquired from the auditors who participated in the survey
and their top management. This is pertinent because the Jordanian
government has a stringent regulation that prohibits Jordanian auditors
from participating in any study without the consent of their companies’

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 Mohamad Hesham Adnan Allbabidi

top management. Once the permission was granted, the questionnaires

were personally distributed to external auditors who were randomly
selected from different areas in Jordan. Of the 186 questionnaires
administered, a total of 168 were retrieved, resulting in a 90.32 per
cent response rate, hereby considered high. This was possible because
the questionnaires were personally distributed, which was the most
preferred approach, instead of online distribution or by the telephone. In
this study, each construct or variable was measured through the use of
multi-items adapted from previous studies. These were measured based
on the 5-point Likert-scale. Appendix 1 further illustrates.

4. Analysis and Findings

The partial least squares (PLS-3) structural equation modeling was
employed to test the conceptual model and the developed hypotheses.
Majority of the respondents were males (69.6 per cent), aged between
20 to 29 years old (54.8 per cent). More than half (59.5 per cent) of the
respondents possessed a bachelor’s degree and had been working for
more than 10 years (27.4 per cent). A total of 91.7 per cent of the respon-
dents had professional qualifications, with majority of them possessing
the JACPA, and most being Junior Auditors. Table 1 summarises the
demographic profiles.

4.1 Measurement Model Analysis

The measurement model analysis was performed so as to examine the
model’s reliability and validity. This was assessed through convergent
validity and discriminant validity tests. As shown in Table 2, the
factor loadings for all items were between 0.548 and 0.956, which were
above the threshold value of 0.5 (Hair et al., 2017). Both the composite
reliability (CR), and average variance extracted (AVE) scales were above
the accepted values of 0.5. These figures implied that the items satisfied
the convergent validity test.
Besides convergent validity, the current study also uses discriminant
validity to strengthen the findings. As per past studies, the discriminant
validity is only deemed to exist if the value of the average variance
extracted for a particular construct is higher than its correlation with
other constructs (Hair et al., 2017). As noted in Table 3, all constructs had
AVE values which were substantially higher than their correlation with
other constructs, indicating that there was discriminant validity.

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 Hype or Hope: Digital Technologies in Auditing Process

Table 1: Demographic Summary of Survey Respondents

Demographic Category Frequency Percentage

Variables (%)

Gender Male 117 69.6

Female 51 30.4

Age 20 – 29 years 92 54.8

30 – 39 years 28 16.7
40 – 49 years 20 11.9
50 – 59 years 22 13.1
60 years and above 6 3.6

Educational Level Diploma 13 7.7

Bachelor 100 59.5
Master 42 25.0
Doctorate 13 7.7

Experience Never 14 8.3

Less than 1 year 23 13.7
2 – 5 years 44 26.2
6 – 10 years 41 24.4
Above 10 years 46 27.4

Professional qualification Yes 154 91.7

No 14 8.3

Type of professional CPA 51 30.4

qualification ACCA 11 6.5
CMA 12 7.1
JACPA 80 47.6
No qualification 14 8.3

Current position Audit Partner 31 18.5

Audit Senior Manager 24 14.3
Audit Manager 22 13.1
Senior Auditor 33 19.6
Junior Auditor 44 26.2
Audit Trainee 14 8.3

Asian Journal of Business and Accounting 14(1), 2021 71

Table 2: Convergent Validity of Measurement Model

Constructs Items Factor Average Cronbach’s Composite

Loadings Variance Ex- Alpha Reliability
tracted (AVE) (CR)

IT Knowledge ITK1 0.816 0.573 0.839 0.869

ITK2 0.763
ITK3 0.811
ITK4 0.625
ITK5 0.754
IT Cognitive ITCS1 0.759 0.6 0.834 0.882
Style ITCS2 0.744
ITCS3 0.784
ITCS4 0.797 0.545 0.719 0.825
ITCS5 0.787
IT Self-Efficacy ITSE1 0.589
ITSE2 0.755
ITSE3 0.863
ITSE4 0.720
IT Manage- ITMS1 0.838 0.728 0.875 0.914
ment Support ITMS2 0.928
ITMS3 0.842
ITMS4 0.800
IT Training ITT1 0.887 0.667 0.834 0.888
ITT2 0.887
ITT3 0.707
ITT4 0.772
IT Facilitating ITFR1 0.889 0.688 0.886 0.917
Resources ITFR2 0.870
ITFR3 0.851
ITFR4 0.756
ITFR5 0.773
Complexity of CCS1 0.861 0.843 0.917 0.941
Clients’ IT CCS2 0.956
System CCS3 0.934
Competitive CP1 0.873 0.510 0.703 0.801
Pressure CP2 0.612
CP3 0.776
CP4 0.548
Regulations of RPBJ1 0.907 0.572 0.842 0.868
Professional RPBJ2 0.793
Table 2: Continued

Constructs Items Factor Average Cronbach’s Composite

Loadings Variance Ex- Alpha Reliability
tracted (AVE) (CR)

Bodies in RPBJ3 0.719

Jordan RPBJ4 0.687
RPBJ6 0.647

Auditors’ AP1 0.805 0.637 0.885 0.913

Performance AP2 0.848
AP3 0.735
AP4 0.725
AP5 0.867
AP6 0.796

Digital DTU1 0.889 0.738 0.875 0.924

Technologies’ DTU2 0.715
Utilisation DTU3 0.805
DTU4 0.773
DTU5 0.857

Table 3: Discriminant Validity Analysis

Constructs CCS CP ITCS ITFR ITK ITMS ITSE ITT AP RPBJ DTU

CCS 0.918
CP 0.218 0.714
ITCS 0.244 0.337 0.774
ITFR 0.308 0.593 0.499 0.829
ITK 0.126 0.327 0.323 0.490 0.757
ITMS 0.256 0.541 0.412 0.508 0.250 0.853
ITSE 0.361 0.463 0.490 0.526 0.322 0.613 0.738
ITT 0.182 0.620 0.217 0.551 0.486 0.637 0.485 0.817
AP 0.165 0.578 0.508 0.710 0.423 0.720 0.532 0.651 0.798
RPBJ 0.371 0.007 0.204 0.057 0.316 0.108 0.108 0.039 0.292 0.756
DTU 0.201 0.312 0.220 0.525 0.426 0.270 0.641 0.523 0.350 0.567 0.770

Notes: The numbers in bold in the diagonal row are square roots of the AVE, SD =
Standard Deviation, M = Mean, CCS = Complexity of Clients’ Systems, CP
= Competitive Pressure, ITCS = IT Cognitive Style, ITFR = IT Facilitating
Resources, ITK = IT Knowledge, ITMS = IT Management Support, ITSE = IT Self-
Efficacy, ITT = IT Training, AP = Auditors’ Performance, RPBJ = Regulations of
Professional Bodies in Jordan, DTU = Digital Technology Utilisation.
 Mohamad Hesham Adnan Allbabidi

4.2 Structural Model Analysis

Assuming that the measurement model satisfied the convergent and
discriminant validity, a structural model was thus developed and then
tested. The R square value for the auditors’ performance and their digital
technologies’ utilisation were recorded at 0.754, and 0.683, respectively.
This indicates that a substantially adequate model has been developed.
Table 4 presents the hypotheses testing results. The results revealed that
IT knowledge (β=0.527, t=3.253, p<0.001), IT cognitive style (β=0.321,
t=1.368, p<0.05), IT self-efficacy (β=0.374, t=4.521, p<0.001), IT manage-
ment support (β=0.111, t=2.150, p<0.05), IT training (β=0.224, t=3.298,
p<0.01), IT facilitating resources (β=0.303, t=5.265, p<0.001), perceived
complexity of clients’ IT system (β=0.126, t=2.541, p<0.05), competitive
pressure (β=0.155, t=3.187, p<0.05), and regulations of professional
bodies (β=0.192, t=5.225, p<0.001), all had positive impact on digital
technologies’ utilisation. These results further supported H1a, H1b, H1c, H2a,
H2b, H2c, H3a, H3b and H3c. This showed the evidence which indicates that
digital technologies’ utilisation had a significant influence on auditors’
performance (β=0.160, t=5.225, p<0.001). Hence, H4 was supported.

5. Discussion
This study aims to investigate the impact of technological, organisational
and environmental factors on digital technologies’ utilisation. It also
attempts to investigate the relationship between digital technologies’
utilisation and auditors’ performance. Consistent with previous studies
(Curtis & Payne, 2014; Chakraborty et al., 2008; Schwarzer, 2014), this
study lends credence to the importance of technological, organisational
and environmental factors, as noted through the findings. The move to
industrial revolution 4.0 has brought about many emerging software/
applications/hardware to the auditors’ working environment (Lois,
et al., 2020; Dbouk & Zaarour, 2017). Such a situation may cause a
“change” in the auditing process, and as a result, some aspects of
judgments had become digitised. The robotic process automation has
replaced the traditional revenue and payroll testing process, hence in
the new auditing method, different machine learning techniques are
being applied. This helps to create a predictive model which can impact
the auditing process. While the emergence of these technologies may
be a tool that could improve the auditing process, the changes these
technologies imposed on organisations may be perceived differently by

74 Asian Journal of Business and Accounting 14(1), 2021

 Table 4: Hypotheses Testing Results

Construct Hypotheses Path Sample Standard T-Statistics P-Values

Coefficient Mean Deviation (|O/STDEV|) (One-tail)
(M) (STDEV)

IT Knowledge → Digital Technologies’ H1a 0.527 0.530 0.052 3.253 0.000

Utilisation
IT Cognitive Style → Digital H1b 0.321 0.320 0.062 1.368 0.001
Technologies’ Utilisation
IT Self-Efficacy → Digital H1c 0.374 0.369 0.068 4.251 0.000
Technologies’ Utilisation
IT Management Support → Digital H2a 0.111 0.101 0.050 2.150 0.016
Technologies’ Utilisation
IT Training → Digital Technologies’ H2b 0.224 0.215 0.055 3.298 0.000
Utilisation
IT Facilitating Resources → Digital H2c 0.303 0.295 0.070 5.265 0.000
Technologies’ Utilisation
Perceived Complexity of Clients’ H3a 0.126 0.118 0.060 2.541 0.006
IT System → Digital Technologies’
Utilisation
Competitive Pressure → Digital H3b 0.155 0.140 0.051 3.187 0.001

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Hype or Hope: Digital Technologies in Auditing Process

Technologies’ Utilisation
Regulation of Professional Bodies in H3c 0.192 0.188 0.075 2.699 0.004
Jordan → Digital Technologies’
Utilisation
Digital Technologies’ Utilisation → H4 0.160 0.151 0.057 5.225 0.000
Auditors’ Performance

75
 Mohamad Hesham Adnan Allbabidi

different auditors, depending on their level of self-efficacy and comfort

in using the technologies (Wicaksono & Lusianah, 2016). Consequently,
some auditors may hesitate in utilising these digital technologies. They
may refrain from adapting to the changes, and from learning new things
due to their low confidence, and their lack of technology “savviness”.
It is probable that their lack of adequate IT skills and knowledge may
cause them to perform their job less effectively. In some extent, their lack
of skills and knowledge may cause them anxiety, which then lowers
their optimisation in digital technologies’ utilisation (Mansour, 2016;
Handoko et al., 2018). The continuous upgrading of technologies may
also unsettle their confidence, thereby leading to the need for them to be
retrained several times. A process of this nature may lead to substantial
training costs for the organisations. Based on this, it is not surprising,
that without the support of the management, digital technologies and
their benefits may not materialise.
The rapid advancement of digital technologies and the benefits
they bring to the auditing process have enabled many large accounting
firms to introduce the use of technology, such as artificial intelligence, in
making audit judgments (Serpeninova, et al., 2020). This advancement
may pressurise the auditors into changing their conventional auditing
process to something more current, so as to stay ahead of current
changes. As auditing firms are regulated by professional accounting
bodies, there is no doubt that the auditing standards issued by the pro-
fessional bodies would help to increase their awareness on current and
new technologies that would enhance their management of accounting
issues (Curtis & Payne, 2014). As members of the professional bodies,
these auditors would be influenced to utilise these digital technologies,
as noted by the current study. This outcome may be due to the fact that
many of the respondents in the current study were from large enterprises
with large accounting transaction volumes, which may be overwhelming
and less manageable to be audited manually. In that regard, it explains
why these large auditing firms would require a complex accounting
information system (Pratoomsuwan, 2017). Thus, there is a need for
the auditors concerned to use digital technologies, which are more
advanced, in order to perform their auditing tasks more efficiently.

6. Implications and Conclusion

In conclusion, this paper presents the extent of digital technologies’
utilisation in the auditing context by focussing on the technological,

76 Asian Journal of Business and Accounting 14(1), 2021

 Hype or Hope: Digital Technologies in Auditing Process

organisational and environmental (TOE) framework. Theoretically, it

contributes to existing literature by incorporating the environmental
factors into the framework; it also measures the complexity of clients’
IT system from the perspective of external auditors. This study also
expands on previous literature by investigating the impact of digital
technologies’ utilisation on auditors’ performance.
With the emergence of industrial revolution 4.0, audit firms,
professional bodies, and regulators are beginning to direct their focus
to the impact of technology. The result of this study showed that
technology has clear benefits on the operational efficiency of the auditing
process. Alongside these benefits, firms, however, need to overcome
some of the challenges, some of which are not fully understood. There
is no doubt that the disruptive technologies are having a profound
impact on the skills required of auditors, and this has implications
for educators and recruitment policies. The findings derived from
the current study suggest that it is imperative for firms and educators
to develop digital talents. It appears that IT and coding should be
embedded into the educational syllabus because IT is no longer a niche
subject area. Digital skills are the engine of the future’s growth, hence
there is a need for educational institutions to expose future graduates to
such knowledge as it would help prepare them to practise auditing with
more efficiency since digital technologies’ utilisation offers many huge
benefits. Auditing firms must not only focus on accounting technical
skills when delivering or sending auditors for training. Instead, they
need to blend the technical skills with digital skills so as to enhance the
auditors’ performance. Training institutions need to plan and design
special training programmes which can increase the IT cognitive styles
of auditors. Doing so would help to improve their attitude and their
habitual strategies for recognising, remembering, thinking and problem-
solving in their performance. With sufficient training and support from
the top management, the auditors’ competency could be improved, and
digital technologies’ utilisation could increase.
In response to the speed of technological and digital advances noted
in the auditing context, it is imperative for audit firms and auditors to
invest in these technologies, and to know how to use them. The parties
involved may need to consider artificial intelligence, block chain,
and other developments in data capabilities as a measure to ensure
their competitiveness. It is important for audit firms to adopt digital
technologies so that their audit strategies can be aligned with the clients’
sophisticated accounting systems. The findings of this study also suggest

Asian Journal of Business and Accounting 14(1), 2021 77

 Mohamad Hesham Adnan Allbabidi

that professional accounting bodies need to tighten the requirements in

using digital technologies, and to provide support so as to encourage
audit firms to use the tools.
While this study provides contributions to both academia and
practice, it is also restricted by some limitations. First, the study only
focused on external auditors, and not internal auditors in Jordan.
Future studies may consider the internal auditors and their relationship
with external auditors, whether in Jordan or other countries, so as to
provide new insights into the audit profession. Second, this study had
not considered the responses of stakeholders on the importance of IT
and its relationship with external auditors. Future studies could focus on
this area so as to uncover the IT gap between stakeholders and external
auditors. It may also be useful for future research to identify stakeholders’
satisfaction with external auditors’ tasks. Finally, this study had only
focused on the context of Jordan without considering other developing
or developed countries. Future studies could therefore focus on other
countries so as to provide new insights which could be compared
professionally and specifically with regards to auditors’ performance.

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Appendix 1
Measurement of Variables

Variables Items Questions Sources

IT knowledge ITK1 I have good knowledge of general Ismail &

office automation. Abidin (2009)
ITK2 I have good knowledge of
accounting firm office automation.
ITK3 I have good knowledge of audit
automation.
ITK4 I have good knowledge of
e-commerce technologies.
ITK5 I have good knowledge of system
design and implementation.

IT Cognitive
ITCS1 I usually have original ideas. Chakraborty et
Style
ITCS2 I like to proliferate (increase) ideas. al. (2008)
ITCS3 I am self-motivated person.
ITCS4 I usually think critical to show my
work problems.
ITCS5 I like to cope with several new
ideas at the same time.

IT Self-Efficacy ITSE1 I am capable to achieve the goals Iskandar et al.

I have set for myself. (2012)
ITSE2 I have the IT skills that help me to
accomplish my tasks.

82 Asian Journal of Business and Accounting 14(1), 2021

 Hype or Hope: Digital Technologies in Auditing Process

Appendix 1 (continued)
Measurement of Variables

Variables Items Questions Sources

ITSE3 In general, I think that I can utilise

the IT to obtain outcomes that are
important to me.
ITSE4 I be able to successfully use IT to
overcome many challenges.
ITSE5 I am confident that I have IT
knowledge to help me to role
effectively on many different tasks.
ITSE6 I have IT skills that enable me to
do most tasks very well.

Management ITMS1 Top management is interested in Ragu-Nathan

Support IT function. et al. (2004)
ITMS2 Top management in my firm is
aware of the benefits that can be
achieved by using audit technology.
ITMS3 Top management always supports
and encourages the use of audit
technology.
ITMS4 Top management keeps the
pressure on auditors to use IT.

IT Training ITT1 Continuous IT training provided by Takeuchi et al.

firm helps me to do my auditing job (2007)
more efficiently.
ITT2 Comprehensive IT training
programs provided by firm are
important in enhancing my
auditing job.
ITT3 Training programs provided by
firm developed my IT skills and
knowledge.
ITT4 IT Training programs provided by
firm enhanced my auditing job
experiences.

IT Facilitating ITFR1 I have the resources necessary to Curtis &

Resources use the information techniques Payne (2014)
used in this organisation.

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 Mohamad Hesham Adnan Allbabidi

Appendix 1 (continued)
Measurement of Variables

Variables Items Questions Sources

ITFR2 Information techniques used in this

organisation are compatible with
other audit software I use.
ITFR3 Assistance is available for system
difficulties when I use the
information techniques used in this
organisation.
ITFR4 Specialised instructions concerning
the information techniques are
available to me.
ITFR5 Information techniques used in this
organisation fits well with the
firm’s audit approach.

Complexity of CCS1 Auditing in a highly automated Gerrard &

Clients’ IT system is complex. Cunningham
System CCS2 Auditing clients use complex IT (2003)
systems involving complex
procedures.
CCS3 Computer-related audit procedures
are difficult to understand.

Competitive CP1 As a response to the competition, Chwelos et al.

Pressure I use IT to perform my audit job. (2001)
CP2 In the audit firms, the adoption of
IT is helpful in allowing an
organisation to remain competitive.
CP3 There is pressure to adopt IT
placed on my audit firm by our
competitors.
CP4 It is important to apply the latest
technology to stay competitive.

Regulation of RPBJ1 Regulation of Professional Bodies Al-Kharbi

Professional takes into consideration the (2010)
Bodies in continuous development of IT.
Jordan RPBJ2 Regulation of Professional Bodies
takes into consideration the audit
procedures in IT.

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 Hype or Hope: Digital Technologies in Auditing Process

Appendix 1 (continued)
Measurement of Variables

Variables Items Questions Sources

RPBJ3 Professional bodies such as JACPA

provide the essential framework of
the audit procedures in the
computerised environment.
RPBJ4 Professional bodies such as JACPA
work to promote the profession of
audit to cope with IT.
RPBJ5 Professional bodies have ability to
change the auditing competitive
environment.
RPBJ6 There is a relationship between the
professional bodies such as JACPA
and the international professional
organisations to develop the audit.
Auditors’ AP1 I found the information techniques Curtis &
Performance used in this organisation useful in Payne (2014)
my electronic audit job.
AP2 I found using the information
techniques used in this organisation
enabled me to accomplish tasks
more quickly.
AP3 I found using the information
techniques used in this organisation
increased my overall productivity.
AP4 I found using the information
techniques used in this organisation
increased my chances of getting a
raise.
Digital DTU1 Utilisation of General Office Ismail &
Technologies’ Automation. Abidin (2009)
Utilisation DTU2 Utilisation of Accounting Firm
Office Automation.
DTU3 Utilisation of Audit Automation.
DTU4 Utilisation of E-Commerce
Technologies.
DTU5 Utilisation of System Design and
Implementation.

Asian Journal of Business and Accounting 14(1), 2021 85