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1、、Presentation to the 5th Continuous Assurance Symposium, November 2002Mary B. CurtisDepartment of AccountingUniversity of North TexasOctober 30, 2002Because this is a proposal for future research, please do not reference, quote or employ without the authors permission. Your comments and suggestions
2、are gratefully accepted. 11An Innovation Characteristics Approach to theStudy of the Adoption of Continuous AssuranceStill in its infancy, very little continuous auditing is currently conducted. Possible explanations include difficulties in analyzing costs and benefits of this approach for those who
3、 might adopt CA, technological difficulties in implementing CA, lack of or unidentified demand for CA, or perceptions of excessive litigation risk if it doesnt perform as expected or needed. I contend that most of these problems are due to a shortage of information about CA in the business world, an
4、d most importantly, the auditing profession. It is thought that the push to adopt continuous auditing could come from any of three different parties: The Securities and Exchange Commission could make CA a legal requirement in order to reduce audit lag, external users such as analysts and suppliers c
5、ould require access to CA reports as a condition of doing business with the organization, or auditors could initiate the use of CA as a way to facilitate and enhance their fiduciary duties. It is my belief that, while CA is in its infancy, regulators and users are not likely to take the drastic step
6、 of demanding a particular audit approach. Instead, the initiative must come from auditors, both internal and external. Thus, in order for CA to move from infancy to common practice, it must first gain auditors acceptance. If auditors assert that CA is both possible and necessary, I believe the inno
7、vation will be successful. However, as with any technological advance, this acceptance will be a gradual process, initiated by a few who then demonstrate its benefits toward an eventual wider acceptance. Therefore, the first steps in the evolution of CA must be taken by those who are herein called “
8、innovators” - individuals who identify a new solution to an existing problem and actively promote its implementation. The research study proposed here is designed to examine the decision process whereby an individual auditor would chose to become an innovator, by promoting continuous audit to their
9、organization. The theory regarding the determinants of innovation is discussed in the next section and a proposed experimental design follows.PRIOR RESEARCHTHEORETICAL FOUNDATIONThe theory of planned behavior (Ajzen 1991; Ajzen and Fishbein 1980; Jackson et al. 1997) is employed to guide the develop
10、ment of a model which will predict individual auditors promotion of continuous auditing (Exhibit 1). The theory is based on the notion that behavior achievement depends jointly on motivation (intention) and ability to act (behavioral control). Intention is assumed to capture the motivational factors
11、 of attitude toward the behavior, the subjective norm, and perceived behavioral control. The justification for asserting that intentions lead to actions is that, to the extent that a person has the required opportunities and resources (perceived behavioral control), and intends to perform a behavior
12、, then it is likely that he or she will perform that behavior. Ajzen (1991) cites numerous studies reporting strong correlations between intent to perform an act and actual performance of that behavior.Each of these components is discussed in more detail below. Ajzen states that perceived behavioral
13、 control is most compatible with Banduras (1977) concepts of self-efficacy, including an individuals confidence in their ability to perform and in their organizations ability to support the performance. Thus, the factors described below as Individual Inclination to Innovate and Organizational Orient
14、ation Toward Innovation represent the individuals perceived behavioral control. The attitude toward the behavior, referring to the degree to which a person has a favorable appraisal of the behavior in question, is addressed by the Experience Characteristics and Level and Importance of Assurance fact
15、ors. Subjective norm is addressed in this model through the Innovation Characteristics of the technology.This and similar theories have been employed to address technology acceptance. For example, Karahana et al. (1999) asserted that the key constructs in an innovation decision process are the innov
16、ations perceived attributes, the key decision makers individual attitude and beliefs, and communications received by the individual from his/her social and business environment about the innovation and innovation in general. The constructs discussed previously can be mapped to Karahana et al.s theor
17、y as follows: the innovations perceived attributes are represented by Level and Importance of Assurance and Innovation characteristics; individual attitude and beliefs are represented by Inclination to Innovate and Experience characteristics; and communications from the environment are represented b
18、y Organization Orientation Toward Innovation. Additionally, Jackson et al. (1997) tested the Technology Acceptance Model, based on Azjens earlier theory, the Theory of Reasoned Action (Ajzen and Fishbein 1980). However, previous research in this field primarily addresses the individuals willingness
19、to use software currently available to them. This study extends existing theory to investigate willingness to promote the implementation of untried software and combines several theories to develop a more complete model of technology innovation.PERCEIVED BEHAVIORAL CONTROLINCLINATION TO INNOVATEIt i
20、s asserted here that initial adoptions of Continuous Auditing will be spurred by innovators audit professionals, either internal or external, who see the potential benefits of the technique and then influence their organizations to implement it, possibly only on a small scale initially. Thus, the st
21、udy of adoption of CA must include the consideration of who will influence organizations to adopt. A scale, designed to assess characteristics of the individual, will be developed. The foundation for development will be the Organizational Change literature, which offers a rich assortment of models f
22、or such research (see for example: Kolody 1998). Organizational change may be the result of any number of events, including competitive opportunities or pressures, external technological change, management initiative. The need for change may be identified by upper management or may be thrust upon th
23、e organization from outside (business partner, governmental agency, competitors, technology vendor, etc.). The change agents in most of these research scenarios are “champions” of an innovation - for example, a management person who has been assigned the task or who is hired for this job, or an outs
24、ide consultant whos expertise is in serving as change facilitator.That research does not apply perfectly to this project, however, because the study proposed here addresses changes which are opportunities rather than necessities. The type of opportunity addressed in this research may be identified f
25、irst by individuals who are not in a position to dictate the adoption of the innovation, but rather must sell the idea and garner support for it. These individuals are called “innovators,“ rather than champions. Innovators are typically non-management employees who could easily perform their jobs wi
26、thout becoming involved with the innovation. However, they identify the opportunity or need and feel responsible and empowered to bring the potential change to the attention of management, possibly directing the implementation of the change after a high-level individual has been persuaded to champio
27、n the cause. Innovators take on this role despite the fact that it may cost rather than benefit them: for example it often means more work on their part and may use up political capital. I have found no research aimed at these types of change agents. The primary contribution of this research will be
28、 the creation of an “inclination to innovate” scale which identifies what characteristics make individuals more or less inclined to offer innovations into their environment. Individuals vary on many basic personality characteristics, including aversion to risk and comfort with change. Thus, a fundam
29、ental characteristic of the Inclination to Innovate model must be the individuals attitude toward innovation, in general and within a particular context. Goldsmith (1991) revised and validated a scale of innate innovativeness, which conceptualizes as a willingness to try new things. Goldsmith and Jo
30、facker (1991) developed an innovativeness measure that is domain-specific, but can be used before an innovation appears, because if focuses on the individual and how they behave, rather than the innovation itself. Flynn and Goldsmith (1993) validated the scale with excellent success, determining tha
31、t it was unidimensional. These or similar scales will be employed as a measure of the individuals Inclination to Innovate.ORGANIZATION ORIENTATION TOWARD INNOVATIONThe individual may think that continuous auditing should definitely be implemented, but feel that investing their emotional and professi
32、onal capital would not be beneficial if the organization would not or could not support the innovation. Although the Organizational Innovation or Diffusion theories have been applied previously at the organizational level of analysis, it is appropriate here to assess the extent to which the individu
33、al perceives their organization to be innovative and to encourage innovation in its employees.Organizational innovation is a fairly extensive field of study in the management literature. Damanpour (1991) performed a meta-analysis of the determinants and moderators of organizations which have been su
34、ccessful in innovation. I have identified five factors from this meta-analysis which may influence an auditors perceptions of the viability of innovation within their organization. First, managerial attitude toward change is considered to create an internal climate conducive to innovation. Technical
35、 knowledge resources provide support for the development and implementation of software. Slack resources available for such innovation “allow an organization to afford to purchase the innovation, absorb failure, bear the costs of instituting innovations and explore new ideas in advance of an actual
36、need. “ (p. 559) Formalization and centralization (Damanpour) work against innovation, since flexibility and low emphasis on work rules and structure permit openness in communication and actions, encouraging new ideas and behaviors. Specialization and functional differentiation within the audit func
37、tion would provide a greater knowledge base and increase cross-fertilization of ideas within the department.ATTITUDE TOWARD THE BEHAVIOREXPERIENCE CHARACTERISTICSIt can be assumed that auditors would have more confidence in the functionality of software for which they have seen demonstrated success.
38、 Thus, experience with similar technology is a critical factor, since it is likely that an individual would be most comfortable with and more willing to invest political capital in a technology with which they are familiar. The expectation is that, the more foreign the technology, the more difficult
39、y the individual would have in championing its implementation. Jackson et al. (1997) extended Davis (1989) Technology Acceptance Model to investigate the role of prior involvement with software in the behavioral intent to use that software. The researchers proposed that involvement is both situation
40、al, such as participation in the development of a computer system, and intrinsic, concerning the association between an action and self-relevant goals and values. Since this study addresses an intent to recommend the development of new software, the subjects can not have prior experience with its de
41、velopment. However, the auditor may have participated in the development and use of similar software, and have opinions which are transferable to CA. Mark Nelson (2000) summarized limitations in Oracles ERP audit trail, which precludes auditors from relying on the software as a source of audit infor
42、mation. Auditor experience with Oracle and similar packages could influence their perceptions of other automated software tools, such as continuous auditing. Nelsons list of experience factors that might influence auditor trust of continuous audit software include Reports, Normalized Data, Security,
43、 Programming, Performance, and Data Transformation (see Exhibit 1). LEVEL AND IMPORTANCE OF ASSURANCELogically, a individuals likelihood of supporting a change is related to the extent to which they feel that change will be effective. Thus, the extent to which the auditor feels that enhanced assuran
44、ce will be provided by CA and to which they feel the particular type of assurance described to them will provide that assurance are important characteristics of the decision to innovate.The two aspects of an accounting system are the process and the outcome: that is, the reliability of the system pr
45、ocesses and procedures, and the reliability of the outputs of the system, which are the accounts and reports. The AICPA has initiated a theoretical discussion (and subsequent related assurance services) regarding information system reliability assurance. The four aspects of system process reliabilit
46、y are availability, security, integrity and maintainability (Boritz et al. 1999). The terms WebTrust and Systrust (AICPA 1999a, 2001) have been coined for the assurance services which address internet and accounting systems assurances (Arnold et al. 2000).The other side of the coin, the outputs, are
47、 the more traditional approach to audit. As system reliability assurance increases, many auditors are de-emphasizing the important of auditing accounts and reports. This can be justified by the assertion that reliability systems produce reliable accounts and reports, de facto.SUBJECTIVE NORMINNOVATI
48、ON CHARACTERISTICSTheoretically, a particular technology is adopted when its innovation characteristics outweigh the cost of adoption. Moore and Benbasat (1991) developed and rigorously tested a Perceived Characteristics of Innovating scale, based on the work of Rogers (1983) and Davis (1986). The u
49、nderlying theory assumes that an organizations likelihood of adopting a particular technology is related to seven characteristics of that technology. First, Davis well-accepted (Agarwal and Prasad 1999; Jackson et al. 1997) Technology Acceptance Model proposes that perceived usefulness and perceived ease of use determine whether existing technology is accepted by users. Relative adv