Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
Auditors’ Perception of the Adoption and Use of Electronic
Work Papers Systems in Thailand’s Audit Firms
Nongnuch Laomaneeerattanaporn* and Prachit Hawat**
This research investigates external auditors’ perception of the adoption and
use of electronic work papers systems (EWPS) in the financial statement
audit, and determines whether the auditors’ skills and performance are
enhanced by the EWPS use. The research approach is qualitative and the
data are collected through interviews and observations. The interviewees
will be at least 45 auditors of the Big4 international professional services
networks in Thailand, and a group of auditors of a local audit firm currently
in the transition process to EWPS as a result of regulation revisions by
Thailand’s Securities and Exchange Commission (SEC) in compliance with
Thai Standard on Quality Control (TSQC) no. 1. The interviews conducted
with the first batch of participating auditors reveal that the use of EWPS at
the Big4 was initiated by their respective headquarters in compliance with
the global policy of the respective firms. The Big4 mandate the EWPS use
in all its member firms and subsidiaries worldwide. The implementation
objectives are to improve auditors’ performance, streamline the operation,
and update the EWPS to comply with new accounting standards.
Furthermore, the initial findings indicate differing views on the EWPS
adoption and use and its usefulness in completing audit assignments
between the management-level and fieldwork-level auditors. The auditors
in the management level (i.e. managers, senior managers, directors and
partners) hold a view that the automation level of EWPS slightly enhances
the audit skills of the fieldwork-level auditors whereas considerable
enhancement in audit skills is perceived by fieldwork-level auditors.
Nevertheless, all participating auditors with long EWPS experiences agree
that without EWPS, it is unlikely to examine all financial statement
assertions and complete the financial audit work on time. The causes of the
differences are also discussed.
Key words: Electronic Work Papers Systems (EWPS), Audit Work Papers, Auditors‟
Perception, Qualitative Research, Audit Automation
1. Introduction
The electronic work papers systems (EWPS) is adopted by auditors to enhance work
efficiency and performance. Nevertheless, the levels of EWPS automation differ among
organizations. A fully integrated audit system is referred to as the “Electronic Work
Papers System” (Ferki & Belanger, 1998) or “Audit Automation” (Manson, McCartney and
Sherer, 1997). According to Sellen & Harper (2002), audit firms adopted EWPS to lower
audit costs and increase the efficiency of internal communication and financial audit
processes.
In Thailand, the Federation of Accounting Profession under the Royal Patronage of His
Majesty the King has introduced Thai Auditing Standard (TSA) 220: Quality Control for an
____________________
*Nongnuch Laomaneerattanaporn, Department of Accountancy, Faculty of Commerce and Accountancy,
Chulalongkorn University, Thailand. Email : nongnuch_lim@hotmail.com
**Dr. Prachit Hawat, Department of Accountancy, Faculty of Commerce and Accountancy, Chulalongkorn
University, Thailand Email: prachit@cbs.chula.ac.th
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
Audit of Financial Statement, TSA 230: Audit Documentation, and TSA 500: Audit
Evidence. The specifics contained in these standards are in full compliance with the
International Federation of Accountants (IFAC)‟s International Auditing and Assurance
Standards Board (IAASB). The TSAs are effective for audits of financial statements for
periods beginning on or after January 1, 2012. Furthermore, on January 1, 2014, the Thai
Standard on Quality Control (TSQC) no. 1 was introduced and is applicable to financial
audit works. Therefore, all audit firms in Thailand are required to comply with the TSQC
standard by adopting and implementing EWPS to ensure the integration of audit risks and
procedure, including the completeness and accuracy of audit works performed by
assistant auditors (Janvrin, Bierstaker and Lowe, 2008; Moeckel, 1990; Moeckel &
Plumlee, 1989).
Problem Statement
Since starting from January 1, 2014, all audit firms in Thailand must conduct audit
processes in compliance with TSAs 220, 230, 500 and TSQC no. 1, Thailand‟s Securities
and Exchange Commission (SEC) audited the financial audit quality of 26 audit firms that
have been authorized to perform financial audit for the listed companies in the Stock
Exchange of Thailand (SET) during October 2011 to December 2013. The results indicate
a lack of quality work papers, including insufficient examination work papers for significant
accounts, detailed strategic audit procedures for subsidiaries, and risk assessment for
audit planning1. Thus, the SEC-authorized audit firms that are currently not in full
compliance with the standards should establish measures to improve the workflow and
completeness of audit work papers. Nonetheless, the degree of EWPS use for audit firms
mandated by SEC to improve their audit work papers were not specified as it varies
depending on auditors‟ views and judgment (Elliotte & Jacobson, 1987).
Research Questions
 In the auditors‟ perspectives, what effects do the adoption and use of EWPS have on
audit firms? To what causes could these effects be attributed?
 What are the differences in the auditors‟ skills and behaviors before and after the
adoption and use of EWPS?
 What are the key contributing factors in the adoption and use of EWPS by external
auditors?
Contributions
The contribution of this study is for audit firms to understand and obtain knowledge of the
auditors‟ perceptions and effects of EWPS adoption and use. The understanding in
auditors‟ perceptions and effects help the management decide on an optimal level of
EWPS automation relative to the organization size and number of employee.
2. Literature Review
The review covers publications on the use of IT in financial audit to explore the past and
future trends of the IT adoption in financial audit.
Information Technology in Financial Statement Audits
The report of summary activities in first round audit quality reviews (October 1, 2011 – December 31, 2013)
: Thailand‟s Securities and Exchange Commission (SEC)
1
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
Elliotte & Jacobson (1987) noted that an enormous quantity of complex transactions
necessitates “Audit Technology” in financial audit. They raised the following questions:
What is the current state of “Audit Technology?”, and to which directions improvements in
technology should be made to correspond to the higher complexity of business
transactions? They also reported that the adoption level of “Audit Technology” could be
determined by the auditors‟ tool kits.
Manson, McCartney and Sherer (1997), and Manson, McCarney, Sherer and Wallace
(1998) examined the use of “Audit Automation” in the financial audit. The definition of
“Audit Automation” in their works referred to the definition given by ICAEW 2 (1993) in
which audit automation means all types of IT use in financial statement audit, ranging
from rudimentary where simple word processing and spreadsheet applications are used to
highly advanced in which a fully automated system is adopted to digitally manage and
store work papers.
In Thailand, Pongpattrachai & Cragg (2009) studied factors which enable IT use in each
phase of spreadsheet usage of seven small local audit firms. The study used Rogers
(1995)‟s Innovation Diffusion Theory as the factor analysis framework. The main
contribution of this research is that it provides the management of audit firms with the
essential factors to take into account in each phase of IT implementation. However, the
study fails to examine possible effects after the implementation of technology.
Research on Effectiveness of Audit Processes
Knechel, Krishnan, Pevzner, Shefchik and Velury (2013) investigated the financial audit
frameworks of Francis (2001) and the U.K.‟s Financial Reporting Council (FRC) (2008) to
identify the main components constituting an audit quality framework. The framework
indicates a constituent member of the second component (i.e. audit processes) that
promotes the accuracy and appropriateness of auditors‟ opinion. This constituent member
is referred to as the “Effectiveness of Audit Process”. This implied that the use of EWPS
in the audit process aids the auditors‟ recording and integrating audit works, ensuring the
effectiveness of the audit process.
Most research on audit quality is of quantitative in nature. One area of study in audit
process effectiveness is the study of factors associated with audit quality in each stage of
audit works. For example, Gibbins & Wolf (1982) identified 39 factors associated with
audit quality in the design, fieldwork and evaluation stages of audit works.
Based on the aforesaid, there exists a research gap on the phenomenon of IT use,
particularly EWPS use, in the audit process. Previous studies on IT use in the financial
audit works focused mainly on the factors contributing to IT implementation, and those on
the effectiveness of audit process were centered on the factors that influence the
effectiveness of each audit process. This research aims to close this gap by investigating
the auditors‟ perceptions on the adoption and use of EWPS.
.
3. Research Methodology
2
ICAEW or the Institute of Chartered Accountants in England and Wales was founded in 1880. It is an international
organization that promotes knowledge and expertise in quality of finance and accounting worldwide.
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
Qualitative Research
This research focused on the perceptions of auditors on the adoption and use of EWPS.
The qualitative research approach is adopted by which interviews and observations are
tools to gather in-depth information from the selected case studies. The Big4 audit firms
and a local audit firm are selected as the case studies since they satisfy the “Particular
Instance”3 criteria. Thailand‟s Big4 audit firms have implemented full audit automation and
periodically adjusted their EWPS, while the local audit firm is in the early stage of EWPS
implementation.
Case Studies and Interviewees
The audit firms have permitted their auditors to participate in the study. The case studies
are regarded as particular instances since they meet the following criteria:
1. They provide the financial statement audit and other assurance services.
2. The EWPS use and automation levels of the audit firms vary. The variation ranges from
rudimentary in which only the word processing and spreadsheet programs are
employed; to semi-automated where the business application software is used together
with a document management system, to highly sophisticated in which every process in
the audit procedure is fully automated and integrated.
3. There are records of adjustments in either EWPS or audit procedure.
The table below details the case studies
Big4 - A
Size employees
(est.)
1,000
Big4 – B
800
Big4 – C
1,000
Firm
EWPS type and status
-
Full audit automation.
All audit processes included in EWPS.
The latest EWPS adjustment made in 2010.
Full audit automation.
All audit processes included in EWPS.
The latest adjustment in audit procedure in
EWPS made in 2009.
Interviewees
10
15
10
Full audit automation.
All audit processes included in EWPS.
The latest EWPS adjustment made in 2007.
Big4 – D
1,000
8
Full audit automation.
All audit processes included in EWPS.
Firm E
30
5
Use of word processing and spreadsheet
programs for EWPS without integration of
audit work papers.
- In the early stage of EWPS implementation.
The interviews started in October 2013 and is planned to be completed by December
2014. The auditors who participate in this research are the “Purposeful Sampling 4”, a
3
-
“Particular instance” – the instances selected by specifying the particular attributes which is suitable to
response research questions appropriately.
4
“Purposeful sampling” – the samples or subjects selected with a particular „purpose‟ in mind or specific
reasons.
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
requisite for case study research (Patton ,1990). The selection criteria of the participants
are:
1. Work as a financial auditor for a minimum of 1 year.
2. Be familiar with EWPS for a minimum of 1, 3 and 5 years for assistant auditors, senior
auditors and management, respectively.
3. Be involved in EWPS during its adoption period in the case of senior auditors and
management.
Due to the nature of this research and to uphold research ethics, the interviewees are
informed beforehand of their rights to refuse to answer specific questions and/or end an
interview session at any time. Each interview session lasts between ½ - 1 hour and is not
limited to only one session. In other words, the interviewees could possibly be invited
again to provide additional information.
Data Analysis
The research framework is designed such that the interview data and behavioristic
observations are analyzed in parallel during and after the interviews. The data analysis
and synthesis processes of this research are conducted in the approach of „Grounded
Theory‟ developed by Glaser and Strauss (1967). The 4 (four) stages of data analysis are
performed as follows:
1. Codes – This stage involves the process of naming, comparing, and memo noting. The
alphanumeric codes have been assigned to the contributing factors, e.g. A1 denotes
“Recognition in efficiency of EWPS”, and A2 denotes “Parent company policy”. These
alphanumeric codes are compared and made the memo notes to analyze the meaning
in the data.
2. Concepts – The second stages involves the collection of the similar contents of codes in
order to group all data.
3. Categories – The broad groups of similar concepts collected from the second stage will
be sensitized to provide meaningful pictures for using in „theory’ generation.
4. Theory – The theory will be finally developed from the collection of categories that detail
the subject of the research.
Trustworthiness
Qualitative research is often perceived as lack of reliabilities. In this research, the
following activities in brief are undertaken to establish the “Trustworthiness” as follows:
 Credibility
The definition of „Credibility‟ is identical to that of “internal validity” in quantitative research
in which the sender and the receiver have the same understanding of a topic (Chuto,
2002). To assure the credibility for this research, it is conducted as a long-term study for
which a period of at least 2 years is required (February 2013 - February 2015) and utilizes
other methods other than the interview, including observations and document review. The
voice recordings, field notes, and data analytic work papers are retained in digital format
for future reference. In addition, the member checking approach is carried out with the
interviewees to verify same understanding between senders and receivers.
 Transferability
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
„Transferability‟ means the results of qualitative research are transferable to other contexts
with similar environment (Chuto, 2002).
This research utilizes and explains the
“Purposeful Sampling” criteria in selection of the subjects whose relevant details are
sufficiently provided to allow for transferring of the research results to other contexts.
 Dependability
Dependability of qualitative research is achieved by adopting various assumptions to test
the research results. The audit trail is carried out to achieve dependability, as suggested
by Lincoln & Guba (1985). This is reaffirmed by the “Transparency of Method” fo Merriam
& Associates (2002). In addition, negative research findings must be identified and
refuted.
 Confirmability
The definition of confirmability in qualitative research is similar to that of objectivity in
quantitative research. In other words, the research results must be void of bias. Thus, the
audit trail is imperative to guarantee the confirmability of the research results.
4. Discussion and Conclusion
This section presents the main findings from the in-depth interviews with the first batch of
interviewees, i.e. 13 out of at least 45 participants.
The management-level auditors hold a view that the EWPS automation level slightly
enhances their audit skills and performance. Examples of the views expressed by
interviewees are:
“A tool is just a tool. Our auditors perform their duty professionally and with due
diligence” – Partner A – Big4 - C.
“Audit quality is our main objective. Our opinion in an audit report must be accurate.
There is no fixed procedure to meet this objective. Thus, the journey from input to
output must be accurate and can be validated. This is achieved through the quality
of my team, not the system” – Partner A – FirmE.
“If EWPS were down, I could still do a review of my team’s working papers through
the printouts and supporting documents. I could pinpoint significant account
balances as I have been trained that way.” - Senior Manager A, Big4 - A.
In contrast, the junior and senior auditors perceive that EWPS considerably enhances
their audit skills. Examples of the views expressed by interviewees from the Big4 are:
“I can’t work without EWPS. It informs me of relevant risks in each auditable area
and thus enables me to select the proper controls. Besides, the system could
identify whether the client implements controls appropriately. It helps me complete
my work without having to worry about the fulfillment of the risk identification.” –
Senior C – Big4 – A.
“EWPS helps ensure that no relevant accounts are overlooked. We only need to
make a checkmark in the checkboxes to select relevant accounts in the risk
assessment step, and the system automatically links to the selected accounts in
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
the following steps. This helps prevent the omission of necessary steps.” –
Assistant Manager (Senior)A – Big4 – B.
The differing viewpoints are possibly attributed to different roles and responsibilities, years
of experience, and the complexity of decisions of different audit steps. In a typical audit
firm, senior auditors set up the audit steps, from the planning to substantive testing steps,
whereas managers review the audit results. This difference in the tasks requires different
levels of EWPS use and results in the differing perceived necessity of the system. In
addition, management-level auditors who are highly experiences rely less on the
technology in the fulfillment of assignments, a finding which is supported by an
interviewee‟s view:
“Without EWPS, the working papers would have been in hard copy, which is the
traditional means to document the audit results, and the automatic linkages would
be non-existent. Interestingly, our latest adjustments to the EWPS reverse to the
traditional audit approach. The reasons are to reduce auditors’ over-reliance on
fixed templates and to do away with their limiting thought process and thus exert
greater effort to identify important findings.” - Partner A, Big4 - B.
Nevertheless, the auditors with long experience of EWPS agree that without EWPS, it is
unlikely to examine all financial statement assertions and complete the financial audit work
on time. This is supported by the following responses:
“EWPS enhances audit efficiency since a feature of the system allows the rollforwarding for recurring clients. Paperless communication and parallel work
processes speed up our audit work.” - Partner A, Big4 - B.
“With the current number of our clients, the question of using or not using EWPS
never pops up because it’s part of my life already.” – Partner B, Big4 – C.
The information from the first batch also reveals that the EWPS implementation at Big4
was initiated by their respective headquarters to comply with the global policy. However,
the local firm‟s audit work papers automation is undertaken as a result of regulation
revisions by the regulatory bodies.
The collection of data from and further analysis of the remaining interviewees are to be
carried out in the next stage. The goal is to obtain more comprehensive answers to the
research questions on the EWPS adoption and use.
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
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