Proceedings of 11th International Business and Social Science Research Conference
8 - 9 January, 2015, Crowne Plaza Hotel, Dubai, UAE. ISBN: 978-1-922069-70-2
The Effect of External Assurance on RTA Information System on
System Users' Reliance Experimental Study
Hebatallah Abd El Salam Mahmoud Badawy
This paper analyzes the impact of the assurance on RTA information system by an external auditor
on the system users’ reliance on the system in the context of decision making. Although there are
several benefits for using IT, but it resulted in various risks that threaten the system, its availability,
integrity and security and in turn the accuracy and integrity it provides to decision makers. This
paper aims to address the impact of the external assurance of RTA information systems, on user's
trust in and reliance on the system in making decisions. This will be done through reviewing prior
literature related to the nature of system trust and assurance on it. In addition, the external auditor’s
program of assurance and the impact of assurance on users’ reliance will be highlighted.
This research contributes to existing literature by providing additional evidence on the effect of
external assurance on RTA system; its availability, security, and integrity, on the system user’s
reliance on the system. Additionally, it provides guidance to solving a critical problem in Egyptian
companies – specifically in commercial banks – that depend mainly on electronic systems to
perform their daily operations.
This paper conducts an experimental study on a sample of first level managers in the commercial
banks in Egypt, who depend mainly on RTA information systems to take their decisions. The results
of the experimental study indicate that first level managers’ reliance on the system increased as a
result of being externally assured.
Keywords: Real Time Systems, Systrust, System Reliance, External Assurance
Field of Research: Social Sciences
1. Introduction
The emerging information technology has produced new business approaches such as
electronic commerce, electronic data interchange, and the internet which have changed
business practices and the process of recording and storing business transactions and lead to
the development of Real-Time Accounting (RTA) (Rezaee et al, 2001). These changes have
resulted in new and various risks that affect the RTA information system and threaten its
availability, integrity and security and in turn the accuracy and integrity it provides to decision
makers. This, in turn, has increased the demand on assurance services on RTA systems and
the information it generates for the purpose of adding value to information that is used by
decision makers. This is clear from the concerns of different professional bodies such as the
American Institute of Certified Public Accountants (AICPA) and the Canadian Institute of
Chartered Accountants (CICA) and the issuance of trust standards that are used to provide
assurance services on the system and the website (Coe, 2005).
___________________________________________________________________________
Hebatallah Abd El Salam Mahmoud Badawy, Lecturer, Accounting Department, Faculty of Commerce, Alexandria
University. E-mail: heba782001@yahoo.com, Phone number: 00201062272260
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Proceedings of 11th International Business and Social Science Research Conference
8 - 9 January, 2015, Crowne Plaza Hotel, Dubai, UAE. ISBN: 978-1-922069-70-2
As a result, companies need to assign this task to an experienced party which could be an
external auditor. Certified Public Accountants (CPAs) are recognized as independent parties that
provide assurance as to the accuracy and fairness of financial information. It is expected that
CPAs are to benefit from their long experience of financial audits and are likely to outperform
other type of assurance providers in the formal application of non-financial assurance services
(Perego, 2009).
Recently, we have witnessed an increasing trend in Egyptian companies, especially banks, to
using e-commerce and e-business. This makes those companies and banks subject to risks
associated with their use of information technology as well as and other parties' risks, which
increases the need for assurance on its RTA Information Systems and the systems of related
parties. To reduce those risks, management needs assurance on the reliability of those systems,
and a decision should be made either to perform the assurance task or not. Such a decision to
choose whether to have assurance on the RTA system or not is a challenging and requires
understanding and measurement of both the costs and benefits associated with such a decision.
To achieve the research objective, the remainder of the paper is organized as follow: Section
Two is designated to the analysis and evaluation of prior research in the field of assurance on
RTA Information System by external auditors. This section lays the theoretical foundation of the
study and leads to the formulation of research hypothesis. Section Three describes the
research methodology used and the experimental design. Statistical analysis and interpretation
of the results will be presented. Finally, Section Four presents the conclusions of the study, and
provides implications and recommendations for future research.
2.
LITERATURE REVIEW AND HYPOTHESIS FORMULATION
The Need for and the Nature of System Trust
A reliable system is the one that works without material error, fault or failure during a specified
time in a specified environment. As for the symptoms of unreliable systems, they include
frequent system failures and accidents that prevent users from accessing essential services,
failure to prevent unauthorized access to the system, which makes it vulnerable to viruses,
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Proceedings of 11th International Business and Social Science Research Conference
8 - 9 January, 2015, Crowne Plaza Hotel, Dubai, UAE. ISBN: 978-1-922069-70-2
hackers and loss of data confidentiality, loss of data integrity, including corrupted, incomplete
and fictitious data, and serious maintenance problems resulting in unintended negative side
effects (Boritz et al., 2000).
Frequently, management needs the output of RTA Information System to be reliable and
provided on a timely basis. Such systems will be useful when information provided by them is
used effectively in the decision making process by users (Sajady, et al., 2008). Effectiveness of
accounting information system depends on the perception of decision makers on the usefulness
of information generated by the system to satisfy information needs for operation processes,
managerial reports, budgeting and control within organization.
Elliot and Pallais (1997, p. 50) defined assurance services related to information systems
reliability as the "assurance that systems are designed and operate in a manner that provides
reliable information or operate according to accepted criteria".
The market for assurance services stems from the decision makers’ desire to receive an
independent expert’s assurance that information used for decision evaluation is accurate
(Kinney, 2000).
Regarding the factors and drivers that are behind the demand on this service, (Boritz et al.,
2000) pointed out that the demand on this service resulted from companies' search for new
markets, reduced costs, and faster change which forced companies to rely on third parties'
systems through different ventures. In addition, computer systems are remote and there is a
need for an assurance provider who has the capability to observe and verify their performance.
Also, IT represents a high level of complexity that can require special expertise. Finally,
assurance on system reliability would be specifically valued when system unreliability creates
the risk of making incorrect decisions for users of a system, or when there are significant
consequences related to unreliability, such as excessive costs or deficient revenues or losing
investors’ trust as a result of system failure (Boritz and Hunton, 2002 and Aly, et al., 2010).
Due to the increasing demand on system reliability, the system reliability task force, a joint
venture of the AICPA assurance services executive committee and the CICA assurance services
development board has developed a new assurance services which is "SysTrust" where in this
type of engagement, assurance providers report on the availability, security, integrity and
maintainability. A SysTrust engagement includes system description that identify the boundaries
of the system covered by the engagement, management's assertions about the system's
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Proceedings of 11th International Business and Social Science Research Conference
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underlying controls and an attestation report by a CPA that evaluates the system against specific
criteria (Boritz at al., 1999).
Kassem (2009, p. 101) defined electronic SysTrust assurance service as "an organized process
to collect and evaluate sufficient and relevant evidence about management's assertions
(disclosures) regarding the effective design and operation of electronic system and test the
extent of conformance of these assertions with measurement and evaluation principles and
criteria of electronic system trust issued by AICPA and CICA and communicate test results to
parties of interest and related to electronic system assurance"
This assurance service benefits internal and external parties of the entities that are engaged in
information based commercial activity; such as system users, outsourcing service providers,
system developers and consultants, management and board of directors, and internal auditors
and system owners (Boritz and Hunton, 2002).
Concerning the participating parties in the assurance services, Bedard et al., (2005) noted that
there are three parties involved in systems assurance services: (1) the users of the assurance
services; (2) the entity hiring the assuror (assurance provider); and (3) the assuror, or "provider".
Assurance providers play a crucial role in the assurance service engagement and they should
have certain attributes. Knechel et al. (2006) discussed the required attributes of assurance
service providers by using a sample of 350 Dutch senior accounting and financial officers and
suggested certain attributes; confidentiality, expertise, professional reputation, independence,
objectivity, integrity, and costliness. Knechel et al. (2006) concluded that overall expertise and
objectivity are perceived to be the most important attributes for selecting an assurance service
provider. Cost is perceived as the least important attribute for assurance services in general.
Most respondents (97, 6%) agreed that expertise is important in the assessment of systems
reliability.
In addition, the provider of system trust service should have skills related to information
technology; however the degree of complexity depends on the system being examined (Boritz,
et al., 1999). Also, the practitioner should have the ability to evaluate internal control effectively.
Additionally, it is required that the auditor who will perform this task should be capable of
meeting the general standards of attestation services especially the specialized professional
competence standard in the system field, perform the service as an integrated process that ends
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Proceedings of 11th International Business and Social Science Research Conference
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up with a positive assurance, and prepare a report on testing the system which meet certain
formal and substantive aspects (Aly et al., 2010).
External auditor’s assurance on RTA information system
Company management can assign the task of assurance on RTA information system to an
external auditor. This decision has its pros and cons. Bedard et al. (2005) addressed the
benefits and costs related to the provision of system assurance service by external auditor from
the point of view of trust services users, clients and providers. From the trust services users'
point of view, this trust will help in reducing agency costs and information asymmetry; which
become greater under electronic commerce. From the trust services clients' point of view, clients
will purchase the service if the perceived benefits outweigh the cost of obtaining the trust report.
Also, Bedard et al. (2005) reviewed prior literature (McPhie, 2000 and Pugliese and Halse, 2000)
and noted that proposed benefits include improving confidence in both business partners’
systems and in one’s own internal systems, avoiding system-development problems and
reducing the cost of business interruption insurance. In addition, the literature (Boritz and
Kearns, 1999 and Trabert and Mackler, 2001 as cited in Bedard et al. (2005) further suggests
that SysTrust provides a good framework for auditing internal systems and restructuring systems
controls and procedures. For the assurance services providers' point of view, they bear
engagement risk (which includes litigation risk), if the current and/or future cost of service
provision exceeds engagement revenues. To reduce this risk, firms must identify the clients for
which trust services can be provided with a reasonable level of engagement risk, and apply
engagement procedures to reduce attestation risk to a satisfactory level and context. In addition,
personnel must have extensive IT experience in order to attain the requisite knowledge to
competently evaluate today’s highly complex computer systems.
Regarding the assurance program for the trust in electronic system, Kassem (2009) designed an
assurance program, in accordance with the requirements of the international standard of
assurance engagements ISAE 3000 titled "assurance engagements other than audits or reviews
of historical financial information". The assurance program consists of the following stages:
* Client acceptance and preliminary planning of assurance on the trust of electronic system
- The engagement acceptance stage is the first stage of the assurance of electronic system trust
service.
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Proceedings of 11th International Business and Social Science Research Conference
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- This stage starts with a contact between the expected customer and the auditor, where he
asked him to perform testing the electronic system related to the customer.
- The auditor should obtain sufficient information related to that client either directly or indirectly
through contacting the previous auditor or through questioning third parties, and in case of
continuing with a current client, previous experience should be reviewed.
- The auditor should assess the extent of professional and practical competence of the audit firm
in which he works, and especially that related to the primary team work members who has
experience in line with the technical requirements to perform this engagement.
- The auditor should assess the independence of team work members and their capabilities to
perform due professional care in performing the engagement.
- The auditor should ensure that the client understands the purpose of the assurance and the
responsibility of the management and that of the auditor and also the limitation of the
engagement.
- The previous items should be in written format in a contractual form and should be signed by
the client and the auditor could refuse to perform the assurance engagement in case of the client
doesn't understand these items.
* Planning of the assurance work on the trust of the electronic system
- The auditor should issue preliminary judgments on the assurance risk on the trust in
management's assertions.
- Assurance risk is the risk that the auditor fails to adjust his report appropriately on the
assertions that are materially misstated. Assurance risk consists of two risks; risk of material
misstatement (risk that the assertions related to assurance field contains material misstatements
and consists of inherent risk and control risk, and detection risk (which is the risk that the
auditor's procedures will not detect these misstatements that affect the engagement area).
- The auditor should issue preliminary judgments on the materiality of the management's
assertions. When considering the concept of materiality, the auditor should understand and
assess which factors could affect the decisions of the intended users.
- The auditor should design the procedures of collecting sufficient and relevant evidence.
- The auditor should plan and perform the assurance service with professional skepticism.
- The auditor should know the principles and the criteria of the assurance on the electronic
system trust.
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Proceedings of 11th International Business and Social Science Research Conference
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* Performance of assurance procedures on the trust of electronic system
- The auditor can ask for the assistance of a person or more from outside the professional
domain (referred to as experts) who possesses specialized knowledge and skills which might not
be available to the auditor and the assistants under his supervision.
- The auditor should supervise assistants, the supervision of assistants includes directing the
efforts of these participating assistants in achieving the service objective and determining
whether the objectives have been achieved or not. Also, the supervision includes guiding
assistants, keeping informed of problems they face and reviewing the work performed by them.
- The auditor should collect sufficient and relevant evidence.
- The auditor should ask for representations from the responsible party, these representations
presented from the responsible party is considered part of the evidence obtained by the auditor
- The auditor should document the assurance processes on the trust in electronic system.
* Reporting on the assurance results on the trust in the electronic system
- The auditor's report on this service is considered the final output and the tool through which the
engagement conclusions are communicated to users.
- The report is a tool to communicate the auditor's opinion to the beneficiaries of the assurance
on the electronic system concerning whether the system has fulfilled the measurement principles
and criteria of trust in electronic system issued by the AICPA and CICA.
- The auditor's report should satisfy a group of basic elements and format aspects that reflect its
features as a professional output from one side and in consistent with the objective of the
service and its field from another side.
- The report should be titled with "independent auditor report on assurance on the trust in
electronic system".
- The report should be directed to the beneficiaries of the electronic system under examination.
- The unqualified report should contain six paragraphs which are introductory paragraph,
attention paragraph, scope paragraph, opinion paragraph, fact report paragraph and finally a
warning paragraph.
- The report should be dated with the date of the auditor's completion of examination.
- The report should be signed by the auditor accompanied by the related audit firm's and its
address and registration number in the accountants and auditors record.
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Proceedings of 11th International Business and Social Science Research Conference
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- In case of the existence of deviations from the used criteria in measurement (material
misstatements) the auditor should adjust his report and not issue an unqualified opinion report.
The impact of assurance on system's users and their reliance on the system
Prior literature discussed the impact of assurance on its beneficiaries. Boritz and Hunton (2002)
aimed to assess the extent to which auditor-provided systems reliability assurance affects
potential service recipients' (1) likelihood of recommending that their company enter into a
contractual agreement with the service provider, and (2) comfort level with the reliability of the
service provider's information systems. Based on an experiment on 481 middle- and upper-level
managers from a broad spectrum of functional areas participated in the study, the study
concluded that auditor-provided assurances on information systems availability security, integrity
and maintainability will exhibit significant main effects with respect to the participants' likelihood
of entering into a contractual agreement with the ASP firm and the participants' comfort level
with the reliability of the ASP firm's ERP system will increase.
In the same context, Mauldin et al., (2006), investigated the potential demand for third-party
assurance reports in business-to-business electronic commerce (B2B e-commerce) by analyzing
95 purchasing professionals' decisions to recommend using a B2B exchange. By using an
experiment, which was a 2×2 between-participants design and varying the assurance scope
(system related assurance vs. data related assurance) and assurance timing (continuous
assurance vs. static assurance) with an additional control condition of no assurance, the results
suggested that purchasing professionals are more likely to recommend using the exchange
when general assurance over the reliability of the exchange's system is present than when
specific assurance over the reliability of transaction information is present. Purchasing
professionals are also more likely to recommend use of the exchange when the assurance
report is continuous than when it is static, issued at a point in time. However, the results also
suggest that participants are less likely to recommend using the exchange when specific
information assurance or static assurance is present than when assurance is not present at all.
Also, Meharia (2011) aimed to investigate the impact of assurance services and the trust on the
mobile payment system on users' use of the system. The study depends on Technology
Acceptance Model (TAM) in order to illustrate this issue. The study noted that the users'
intention to use and their attitude towards the system will determine their actual use. Their
attitude towards the system is determined by the perceived usefulness of the system and the
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Proceedings of 11th International Business and Social Science Research Conference
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ease of use. However the study added that the assurance on the security, availability,
confidentiality, privacy, and process integrity of the system will have a positive impact on the
users' attitude towards the system, in conjunction with the perceived usefulness and ease of
use.
In the same context, Zhou (2011) aimed to assess the impact of initial trust on mobile banking
user adoption. The study posits that the intention to use the mobile banking system is
determined by initial trust and the perceived usefulness of the system. The initial trust is
determined by the structural assurance (such as third party certifications), information quality
and system quality. The perceived usefulness is determined by the information quality and
system quality. Information quality reflects the relevancy, sufficiency, accuracy and timeliness of
the information. However, system quality refers to the speed of access, ease of use, navigation
and appearance of the mobile banking system (Kim et al., 2004 as cited in Zhou, 2011). The
study found that structural assurance, information quality and system quality have an impact on
initial trust. Users need to rely on structural assurance to trust mobile banking because mobile
banking depends on wireless networks and involves great risk and uncertainty. Information
quality and system quality have an impact on the perceived usefulness of the mobile banking
system. If the quality of information is low, users may feel that the providers of such a system will
not provide quality services to them. Additionally, if mobile banking has a slow access speed or if
users experience service unavailability or interruption because of system unreliability, users'
perception towards mobile banking will be affected negatively
Similarly, Greenberg et al., (2012) aimed to investigate the impact of SysTrust criteria
(availability, integrity and security) on users' intention to use and reliability on online accounting
system (of Oracle Small Business Suite) .Based on the TAM, the study posits that the intention
to adopt online systems depend on the perceived usefulness of the system, perceived ease of
use, trust in system reliability, and trust in the internet. The study found that users' intention to
adopt the online accounting system is higher when users' trust in system reliability and trust in
the internet are higher. The results of the study suggest that the reliability of a system, as
measured by SysTrust criteria is relevant to the decisions related to the intention to adopt online
accounting systems.
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Accordingly, it is clear that system assurance has a positive impact on system users and their
reliance and in turn on their decisions, especially when this assurance is provided on continuous
basis which is more suitable to the current changing environment.
From the literature review, it can be noted that Certified Public Accountants (CPAs) can provide
assurance on RTA Information Systems. CPAs are recognized as independent parties that
provide assurance as to the accuracy and fairness of financial information. Additionally, CPAs
are knowledgeable about the subject matter to be assured and the assurance matters, known for
their independence, objectivity and integrity (Boritz and Hunton, 2002), and possess superior
technical competencies (Burton, et al., 2012). Also, it is expected that accounting firms are to
benefit from their long experience of financial audits and are likely to outperform other type of
assurance providers in the formal application of non-financial assurance services (Perego,
2009). Also, CPAs should follow strict and comprehensive ethical and professional standards
when they provide professional matters (Boritz and Hunton, 2002). That's why the American
Institute of Certified Public Accountants (AICPA) considers assurance service on electronic
systems a logical and natural extension to the existing services that the auditor provides,
(www.aicpa.org, 2007). Accordingly, the research hypothesis can be formulated as follows:
H2: Assurance on the RTA Information System by external auditors will have a
significant higher positive impact on the user's reliance on the system, than no
assurance of the system
3. EXPERIMENTAL STUDY
Experimental Design
To test the research hypothesis, and examine the impact of external assurance on RTA
Information System on system users' reliance, an experiment was conducted. This research is
following the same line of thought of the study of (Boritz and Hunton, 2002).
A group of commercial banks – from both the foreign and national sectors – were chosen
randomly. The experiment was directed to first level managers, because they are the decision
makers in banks and the evaluation of RTA Information System and the reliance on it are crucial
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Proceedings of 11th International Business and Social Science Research Conference
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to their work and decision making process. It is important to evaluate the reliability of information
systems from their users’ point of view (relative reliability) (Agmon and Ahituv, 1987).
Commercial banks were being chosen as they depend mainly on the RTA Information Systems
to perform their daily operations. Also, commercial banks included foreign banks and national
banks as it is supposed that all banks are working in the same industry and in a great
competition environment. The reason for selecting just one industry rather than different
industries presents some advantages because respondents in the same industry are working in
similar environments and they have similar skills and backgrounds, which may promote
homogeneity of the data. Additionally, the banking industry was selected for two main reasons.
First, the banking industry in Egypt is one of the most advanced in terms of its accounting
information system that depends largely on technology and key to its economic infrastructure.
Second, the daily operations of a bank depend largely on the reliability, availability, and integrity
of information produced by the accounting information system (Abu-Musa, 2006). Accounting
information generated from the accounting information system is the most important type of
information in commercial banks because of the nature of their work (Al Momani and Obeidat,
2012).
Research Variables
The independent variable in this study is the external assurance; the assurance service provided
by the external auditor. This variable is a dummy variable. It is either present or not.
The dependent variable is the system user’s reli
ance on the system, which was determined according to his/her trust and reliance on the RTA
Information System, and his/her evaluation of the related risk factors (transmitting invalid data,
lost transactions, unsuccessful transaction, information risk and total risk related to internet
banking). (Boritz et al., 2000 and Sinason et al., 2009) It was measured using a 5 point Likert
scale; as it is an ordinal variable.
Participant data
A total of 150 copies of the experiment have been distributed on first level managers of a
random sample of the commercial banks in Egypt. A summarized explanation of the
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Proceedings of 11th International Business and Social Science Research Conference
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experimental case was presented to managers in order to clarify different aspects and reply to
any related questions. Eighty three copies were collected with a response rate 55%. Incomplete
copies were excluded and they were 9. Also, inconsistent copies (23) were excluded.
Inconsistency was determined according to participants' answers to a validity question, which
was used to investigate the credibility of the participants. This validity question was inserted in
each subsection of the second part of the experiment and it is " How would you rate the
probability of your transaction being successfully completed using the output of the RTA
Information System". This validity question followed an opposite direction with regard to its
previous and following questions.
A total of 51 managers, including first level managers like chairmen (1), regional managers (2),
assistant regional managers (3), branch managers (13), senior managers (6) and assistant
managers (26) like operations managers as assistants to branch managers were included in the
sample of the study. Participants were from different branches and head offices in Cairo and
Alexandria. Participants were 39 male and 12 female. They are of different years of experience,
ranging from 6 to 38 years with a mean (median) 21.24 (20) years.
Hypothesis Testing
Before testing the research hypothesis, a reliability test was conducted in order to test the
credibility of the respondents on the questions and statements included in the experiment. Such
a test measures the internal consistency of a scale; the extent to which all related items
measures the same concept (Tavakol and Dennik, 2011). The reliability test showed that
responses are reliable with 80.9% (Cronbach's Alpha = 0.809).
The dependent variable is an ordinal variable and a not scale one. Normality tests (KolmogorovSmirnov and Shapiro-Wilk) showed that the sample selected is not drawn from a normally
distributed population (Sig. is 0.000 for all statements under Shapiro-Wilk and under
Kolmogorov-Smirnov). Accordingly, parametric tests were not suitable to test the data related to
the experiment and nonparametric tests (Wilcoxon Signed Rank Test) were used to test the
research hypothesis.
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3. RESULTS AND ANALYSIS
Regarding the first section of the experiment, which addressed the main aspects and benefits
of RTA information systems, Wilcoxon Signed Rank Test results showed that participants see
that RTA Information Systems are considered clear and understandable (p-value = 0.000), easy
to use (p-value = 0.000) and don't require a lot of management effort (p-value = 0.000).
Regarding the benefits of RTA Information Systems, participants agreed that that such systems
improve the performance of the accounting systems and increases the productivity of the bank
operations (p-value = 0.000). As for the role of the RTA Information Systems in the decision
making process, participants agreed that these systems increase data sufficiency, make
updated information available on time, and increase the speed at which decisions are analyzed
(p-value = 0.000). This result is consistent with prior research (Al-Rawi, 2009 as cited in AlRefaee, 2012), which noted that accounting information systems should generate the needed
accounting information in the appropriate time in order to take accurate decisions, and achieve
suitable supervision and assessment of economic activities.
Also, RTA Information Systems are significant, relevant and useful in first level managers' job (pvalue = 0.000). This conclusion is consistent with the Technology Acceptance Model, which
noted that managers' attitude towards the system is determined by the ease of its use and the
perceived usefulness of such system (Meharia, 2012). Additionally, this result proved the
expectation of (Sriwidharmanely and Syafrudin, 2012) that the perceived ease of use will have a
positive impact on the perceived usefulness of accounting software.
Additionally, participants agreed that information needs to be reliable, and this is consistent with
prior research (Maines and Wahlen, 2006) which noted that reliability is an essential
characteristic for accounting information that should be present to be useful for decision making,
and the information hypothesis which indicated that assured information contains value which
makes it useful to decision makers (Wallace, 1980, as cited in Daigle and Lampe, 2005).
Finally, participants agreed that management should provide reliable information and the need
for such service was created as a result of the surrounding wireless environment (p-value =
0.000). Again, this result is consistent with prior research which noted that managers are
responsible for providing and improving the adopted information systems in commercial banks
(Hayale, and Abu-Khadarah, 2005 as cited in Al Momani and Obeidat, 2012) and the need for
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assurance on RTA Information System has increased in recent years especially with the great
development in communication technology and companies entering the field of electronic
commerce and the consequent dependence on business partners' information system and the
importance of assuring its reliability (Boritz et al., 1999).
Regarding the second part of the experiment, which dealt with the related case and the
impact of the external assurance on the system users' reliance on the system, it consisted of two
subsections; the first subsection was dealing with the no assurance case and the second
subsection was dealing with the external assurance case. Regarding participants’ preferences,
50 participants preferred the external assurance alternative over the no assurance alternative,
while only one participant chose not to ask for this assurance service.
Further, participants agreed that the confidence level (80%) in the existing RTA Information
System is not sufficient for the bank's needs after introducing the new banking services and not
applying any assurance alternative (Wilcoxon test statistic = 56, P = 1.00, and median = 1.5).
Additionally, they don't agree that the bank shouldn't incur additional assurance costs just to
increase the level of confidence from 80% to 90% or 95% (Wilcoxon test statistic = 8.6, P = 1.00,
and median = 1.5).
To test the research hypothesis, Wilcoxon Signed Rank Test was used to compare the
participants' responses to the external assurance case and the no assurance case.
The Research hypothesis deals with the impact of external assurance on system users'
reliance in comparison with the no assurance case. It predicts that first level managers will
rely more on the RTA Information System when it is assured by an external auditor than when it
is not assured at all.
When comparing the first level managers' opinion regarding their trust in the RTA Information
System and their reliability on it under the no assurance and external assurance alternatives, the
statistical results indicated significant differences between the 2 cases; first level managers
showed more trust in the RTA Information System when it is assured by an external auditor than
when it is not assured at all (Z = -5.501, Asymp. Sig (2-tailed) = 0.000). Also, first level
managers' reliability on the systems increased under the external assurance alternative than that
under the no assurance alternative (Z = -5.790, Asymp. Sig (2-tailed) = 0.000). This result is
consistent with the information hypothesis which indicated that assured information contains
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Proceedings of 11th International Business and Social Science Research Conference
8 - 9 January, 2015, Crowne Plaza Hotel, Dubai, UAE. ISBN: 978-1-922069-70-2
value which makes it useful to decision makers (Wallace, 1980, as cited in Daigle and Lampe,
2005).
In addition, the impact of external assurance on the likelihood of risk factors is quite obvious.
Statistical results showed that the likelihood of the risk of incorrect data transmission (Z = -5.665,
Asymp. Sig. = 0.000), lost transactions (Z = -5.156, Asymp. Sig. = 0.000), unsuccessful
transactions (Z= -5.624, Asymp. Sig. = 0.000), information risk (Z = -5.262, Asymp. Sig. = 0.000)
and total risk related to internet banking (Z = -5.907, Asymp. Sig. = 0.000) under the no
assurance alternative is higher than that under the external assurance alternative.
According to the previous statistical results, the research hypothesis was supported.
Concerning the factors behind the participants' preference of the external assurance over the no
assurance alternative, the experiment identified certain factors that are related to external
auditors; the cost, independence level, access to leading practices and specialized skills, the
accounting profession reputation, the objectivity level and the commitment to ethical, educational
and professional requirements.
Regarding the cost factor, which is crucial according to the cost-benefit analysis, statistical
results revealed the insignificance of this factor. This result contradicts with prior research
(Knechel, et al., 2006), which concluded that the cost factor is moderately important in the
assurance on system reliability in particular. Nevertheless, this result is quite logic in the banking
industry and its unique and different nature, as banks used to pay millions of dollars to buy the
operating software of the bank, and it is useless if it is not being assured and causes the bank to
suffer a lot of losses.
In order to identify the relative importance of the other five factors, which represents the reasons
and the benefits of choosing external assurance, Friedman test was used to identify whether
there are significant differences between them and give them a rank. Friedman test results
showed that the accounting profession reputation is the most widely accepted factor (mean rank
= 3.28) among first level managers. This is a logical result as the accounting profession
reputation is the outcome of different factors like experience, skills and capabilities…..etc. After
the accounting profession reputation, Friedman test ranked the other factors to be as follow:
strict adherence to ethical, educational, and professional requirements (mean rank = 3.27),
objectivity (mean rank = 2.97), ability to access leading practices and specialized skills (mean
rank = 2.92), independence (mean rank = 2.55). This result is consistent with prior research
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Proceedings of 11th International Business and Social Science Research Conference
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(Knechel et al., 2006), which concluded that independence is not important in the assurance on
system reliability; however, objectivity and professional reputation are important in providing
such a service (Knechel et al., 2006 and AICPA, 2013).
Regarding the factors that might affect the first level managers' choice of external assurance and
not included in the experiment, one of the first level managers noted that the appropriate
scientific qualification of the assurance provider and his prior experiences in the same field and
the appropriate knowledge of banking operations and operating risks should be taken into
consideration.
5. CONCLUSIONS AND RECOMMENDATIONS
The paper concluded that the evolution and development in the field of IT have a great impact
on the information systems and the information generated. Management depends mainly on
their information systems and their outputs in order to take sound and accurate decisions. In
order to take rational decisions, management should have confidence in their systems and rely
on them. Assurance services were developed to increase the value of information systems and
their outputs. Such an assurance service can be provided by an external auditor.
The paper concluded from its experimental part, that first level managers in the commercial
banks in Egypt are aware of the aspects and benefits of RTA information systems and they
prefer to have their systems assured by an external auditor. Such an assurance increases the
managers’ trust in and reliance on the RTA information systems and in the same time reduces
the likelihood of different risk factors.
Based on the previous conclusions, the researcher recommends more studies to be performed
to examine the impact of assurance on the outputs of the system in the different industries; like
the tourism sector and brokerage and financial exchange sector, that depend mainly on the
output of their electronic systems in their daily operations.
The researcher recommends more studies to examine the impact of different other assurance
providers, other than the external auditor, like internal auditors, IT professionals, accountants,
design experts, specialists or consultants.
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