AQ130-3-3-RMAF Research Methodology in Accounting & Finance Assignment Sample 2026 | APU

Title : The Influence of Emerging Audit Technology Adoption on Audit Quality in Malaysian Small and Medium Audit Practices (SMPs): The Role of Implementation Barriers

Chapter 1: Introduction

1.1 Background

It cannot be denied that what the auditing profession in general is going through in the current world is an era of tremendous change brought about by a combination of technological advancement and increased pressure on improving the quality of audit services by regulatory authorities. Already emerging technologies, including AI, RPA, data analytics, blockchain, and cloud computing, are already transforming the face of audits by introducing a revolution to the processes through which audits are planned, conducted, monitored, and reported. Not only does the introduction of these technologies offer tremendous efficiency in the audit process but also allows deeper analysis and ensures the quality of the findings obtained to shift auditors away from sampling techniques to undertaking full audits of accounting data of their clients (Li, 2026). It can be pointed out that in developed countries such as the USA, the UK, and Australia, there are enormous auditing firms commonly referred to as the Big Four, who have highly invested in purpose-built audit technology software platforms due to their IT resources and cost-effectiveness (Abdullah & Almaqtari, 2024).

Nevertheless, matters are starkly different with regard to Small and Medium Audit Practices (SMPs). SMPs constitute most audit practices across the globe, and are the major providers of audit and assurance practices on the many SMEs that form the back bone of most countries economies. In Malaysia, as an illustration, SMPs are more than 90 percent of registered audit practices with the Malaysian Institute of Accountants (MIA) but these audit firms face a variety and inter-related resource constraints that limit their ability to use the latest audit technology solutions (Hasan et al., 2020). As such, the increasing gap between large audit firms and SMPs in terms of their adoption and utilization of new audit technology gives rise to numerous questions about the effectiveness and viability of the services provided by SMPs.

Malaysia is a case in point of special relevancy in this paper. As part of its national digitalization agenda, which has been packaged through its Malaysia Digital Economy Blueprint (MyDIGITAL), introduced in 2021, there have been concerted efforts by the authorities and the regulators to promote the digitalization of all industries including that of auditing (MOF, 2021). Both the Securities Commission Malaysia (SC) and MIA have clarified that the usage of technology to conduct audits is important in uphold standards in terms of audit quality and investor confidence in the capabilities of capital market in Malaysia. In fact, the MIA Strategic Plan 2021-2025 focuses on addressing digital transformation as one of the priorities on improving the quality of audits.

However, there is minimal empirical evidence on how Malaysian SMPs have been encouraging the process of adopting audit technologies and the constraints that are inhibiting this process. The available literature regarding adoption of audit technology is more inclined towards the developed world, with a bias towards the Western world. The study therefore tries to close this gap by empirically researching on the effects of adoption of new audit technologies on the quality of the audit among the Malaysian SMPs and the moderating effect of Barriers to implementation on this effect. This kind of knowledge is invaluable in coming up with policies, structuring professional training programs, and empowering the management of the Malaysian SMP to make informed decisions on matters of technology investments.

1.2 Problem Statement

Despite increasing efforts to embrace technological auditing techniques, SMPs in Malaysia have remained way behind large organizations when it comes to adopting and implementing the new audit technologies. The implications of this unbalanced situation between the two types of organizations are far reaching not only on the efficiency of the SMPs but also of the quality of the audit that the said SMPs provide, which is one of the most crucial aspects of accounting (Messier et al., 2025). Whereas several studies have been carried out to analyse the relationship between the adoption of audit technology and the quality of audit of large and technologically well equipped companies in advanced economies (Appelbaum et al., 2018; Qasim & Kharbat, 2019), very little attention has been given to the case of SMPs, those in developing countries like Malaysia.

The problem is exacerbated by a number of structural challenges that came with SMPs in Malaysia. To begin with, the majority of SMPs lack financial resources to invest in quality audit software and other IT infrastructure that is necessary to implement innovative audit tools (Zulkifli & Abas, 2022). Secondly, the lack of professionally competent workers means under-supplying with necessary workers, which results in problems connected with working with innovative audit technologies. The Malaysian education system is stated to be more inclined towards theories of accounting and auditing and overlooks the digital literacy, data science, and other skills required to operate audit technologies (Siew et al., 2020). Thirdly, the unwillingness of employees and partners to change to new audit methods due to the treaty enshrined nature of the traditional methods and the fear of losing their jobs presents another obstacle to the incorporation of innovative techniques. Lastly, the uncertainty and ambiguity in regards to the appropriate use of audit technologies mean that no company is willing to make irreversible changes (Habibullah et al., 2026).

Taking all of these problems into consideration it seems that simply implementing an audit technology system will be insufficient in ensuring that quality improvement is made available. How successful (is) the technology adoption may become a determinant of quality will greatly be determined by the extent to which barriers to implementation exist and are overcome. It is against this backdrop that it is high time that the research focused not only on how adoption of technology impacts on quality in Malaysian SMPs, but also the manner in which obstacles to implementation will mediate the impact of technology adoption on quality. It is essential to gain such information in order to allow for the formulation of evidence-based measures that can address technology adoption.

1.3 Research Question

The research questions which guide this study are as follows:

Q1: At what level is the adoption of emerging audit technologies being carried out among Small and Medium Audit Practices (SMPs) in Peninsular Malaysia?

Q2: Is there any positive impact of adopting emerging audit technologies on audit quality at Malaysian SMPs?

Q3: Are the implementation barriers significant moderating factors for the relationship between the adoption of emerging audit technologies and audit quality among Malaysian SMPs such that the positive impact becomes lower when the barriers exist?

1.4 Research Objectives

1.5 Hypothesis

Drawing from the research objectives and the theoretical frameworks of TAM and RBV, the following directional hypotheses are proposed and will be empirically tested:

These hypotheses are elaborated and theoretically justified in Chapter 2, where the relevant literature and theoretical underpinnings are reviewed in detail.

1.6 Significance of Study

There are numerous theoretical and practical contributions of this study. This research is a theoretical contribution since it builds upon the utilization of the TAM and RBV theories to explain how audit technology is adopted within the framework of SMPs in a developing country (Ammeran et al., 2023). Despite its wide use as a prediction theory in information systems literature and even adopted as a predictive tool to forecast the utilization of audit technology among Malaysian SMPs, the TAM theoretical framework has largely been overlooked as a predictive variable in forecasting the adoption of audit technology among Malaysian SMPs. It is notable that, inclusion of implementation barriers as a moderating factor to audit technology adoption is particular as compared to considering implementation barriers as independent factors affecting audit technology adoption. Pragmatically, the findings of the investigation will be used to come up with the relevant recommendations and lessons that can be applied to improve the relationship between the technology and its quality to the benefit of the SMP partner organizations. As such, by determining what particular implementation issues have the greatest impact on the link between technology and quality, the investigation provides a clear understanding of the measures that should be taken to address these critical issues.

In the case of professional associations, such as MIA and the Malaysian Institute of Certified Public Accountants (MICPA), the results provide a theoretical background of the development of customized capacity-building programs, subsidies of audit software and training programs in accomplishing the development of the competencies that have been identified as deficient (Siew et al., 2020). Conversely, in the case of government institutions, the research can serve as empirical support in the development of the environment that will foster the use of technology and comes with the appropriate regulatory framework as well as financial incentives to promote it. This factor is even more significant when it comes to the overall digitalization goals of Malaysia and its intention to ensure the quality of audits that could be comparable to those established internationally by IAASB. Regarding the academic point of view, this research project contributes to the novel and emerging strand of research about the use of audit technology in developing countries in a distinct way. Using an advanced quantitatively-focused methodology and effectively designed moderation-based theory, it provides an example of a research that should be followed by subsequent studies in the area.

1.7 Scope of Study

The specific audience of interest in this study is SMP firms based in Peninsular Malaysia; of interest are those firms that have registered with the MIA and number of audit partners are less than twenty. The reason behind the location of the study to the chosen area is because a majority of MIA-registered practitioners in Malaysia are found within the following states of Peninsular Malaysia: Selangor, Kuala Lumpur, Johor and Penang, which represent the vast majority of MIA-registered practitioners found in Malaysia (MIA, 2025). The research targets audit professionals and managers that have direct experience in audit projects and have encountered any new technology used in audits. The research deliberately does not incorporate the Big Four companies (Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers), or even network firms on the secondary level, as their resource base, organisation structure, their ownership of technology platform, and their adoption of technology paths are very different compared to those of the standalone SMPs. The reason behind this is that, by including such firms, it would add extraneous variables, which would influence the internal validity of the study results.

The changing audit technologies that will be explored are artificial intelligence-enhanced audit tools, cloud computing audit tools, data analysis software (including CaseWare IDEA, ACL, and MYOB Audit), automated sampling techniques and electronic confirmation technologies which are the most commercialized and practicable technologies to Malaysian SMPs. It will be done using a cross-sectional method in the 2025 fiscal year. Issues of technology adoption in relation to the time taken in adoption, and the consequences of the adoption to the quality of auditing are not in this study but are recommended to be included in future studies.

1.8 Limitations

Following are some of the limitations, which are present in the research and must be taken into consideration when interpreting the findings of this study. First, use of data related to a self-administered questionnaire can introduce common method variance and social desirability that can lead to overestimation or underestimation of the degree of technology adoption in their organizations and/or problems related to technology implementation in their organizations. Nonetheless, there will be procedural measures to mitigate the possibility of this occurrence, but this will not be fully eliminated (Xuan et al., 2026).

Furthermore, the research design includes cross-sectional approach, which leaves it impossible to come up with any statements of causation. Even though the research is founded on directional hypotheses based on the existing theory, the researchers were unable to claim that the use of technology results in the improvement of quality auditing or that the barriers to the implementation of technology weaken this correlation. Longitudinal studies in research might be useful in future studies as they would help trace the effect of the adoption of technology on the quality of the audits over different periods.

Thirdly, the audit research is geographically located in Peninsular Malaysia which may limit the scope of the results in generalizing the findings to the audit practices in East Malaysia (Sabah and Sarawak) due to the differences in institutional settings, regulations, and industrial settings that could influence the adoption process and the resulting audit quality. Finally, the construct of audit quality per se is of multidimensional and multifaceted nature, and cannot be measured easily. Like the majority of research studies on audit quality, proxy measures have been adopted to measure the concept of audit quality since quality variables measured objectively are often hard to find.

1.9 Key Terms Definition

1.2.1 Emerging Audit Technology

The term emerging audit technology can be defined as the use of digital tools and technological advancements that are becoming more and more popular within the auditing process. This includes AI, ML, RPA, big data analytics systems, audit management software solutions in the cloud, and distributed ledger technology like blockchain. Emerging audit technology is defined by its ability to process vast amounts of information quickly and accurately at speeds much faster than humans can achieve, which will greatly improve the efficiency and effectiveness of the auditing process (Li, 2026; Qasim & Kharbat, 2019).

1.2.2 Small and Medium Audit Practices (SMPs)

An SMP is an audit firm that does not belong to the Big Four network of accounting firms globally and does not belong to second-tier international networks either. Within the context of Malaysia, SMPs can be described as those that do not have more than 20 audit partners, have a small number of professional employees and offer few specialisations of services besides the audit itself. These types of auditing firms are registered under MIA and are regulated under the same laws governing the conduct of other accounting firms, including the Malaysian Approved Standards on Auditing and International Standards on Auditing (IFAC, 2021).

1.2.3 Definition of Audit Quality

The concept of audit quality is described as the probability that an auditor would identify and communicate any material violation within the accounting system of his/her client (Messier et al., 2025). The current study has used a wider definition or multi-dimensional operationalization of audit quality that includes: (a) efficiency in detecting errors and anomalies, (b) adherence to International Standards on Auditing (ISAs), (c) completeness and correctness of audit documentation, and (d) satisfaction of the clients with the results of audit.

1.2.4 Implementation Barriers

According to research, an implementation barrier refers to the organizational, economic, human, and regulatory factors which hinder or delay the integration of new technology within the core processes of organizations. Within the current study framework, an implementation barrier is treated as a multidimensional concept involving four different dimensions: (a) financial limitation in relation to the cost of acquiring and maintaining the technology; (b) deficiency in technical competence of audit staff; (c) resistance to organizational changes; and (d) uncertainty about regulatory issues in using emerging technology for formal audits (Zulkifli & Abas, 2022).

Chapter 2: Literature Review

2.1 Emerging Audit Technology – Overview

The use of digital technology in auditing has witnessed an unprecedented level of uptake in recent years, driven by a number of forces, such as the advancement in computing capabilities, the increase in financial data both structured and unstructured, and the increased demand for high-quality audits. To aid in the improved evaluation of the technology features, adoption and quality outcomes, academics and practitioners have begun to develop typologies of audit technology. Artificial intelligence is one of the most radical technologies that are already radically transforming the process of auditing. AI technology can denote any type of computer computing including machine learning, natural language processing and neural networks, which allows computer to draw insights regarding large amounts of information in terms of identifying patterns and making predictions with minimal human input (Abdullah & Almaqtari, 2024). Application of AI technology to auditing would enable an auditor to analyse population sizes of financial transactions and identify suspicious transactions and activities that could be due to fraud or error.

The use of data analytics is yet another important technology in today’s auditing tools box. Unlike traditional auditing practices that entail sampling and analysis of only a proportion of the business transactions a client makes, data analytics can be use to examine the entire dataset, thereby enhancing audit coverage as well as improving the susceptibility to unearth the presence of any anomalies (Abdullah & Almaqtari, 2024). Fraction detection, revenue recognition examinations and accounts receivable reviews are all activities associated with improved capabilities due to the use of descriptive, diagnostic, and predictive analytics during auditing activities. Isa & Subramanian (2024) propose that continuous monitoring and data analytics open chances to conduct audits using effective methods that have proven to be the most efficient in their decision-making process and can mitigate the number of post-engagement adjustments to their choices.

Although currently the use of blockchain exists in the early phases of implementation in audits, blockchain still has a lot of potential with regard to enhancing the reliability and verifiability of the audit evidence. As it is used, the audit trails will be simpler to verify since no manipulation will be possible due to an immutable, distributed, and transparent register of transactions. The implementation of a blockchain in the auditing profession could lead to the development of the traditional approach to auditing, which is retroactive, into a more dynamic and proactive one, which does not involve backward-looking. This opinion has been voiced by a number of researchers (Siew et al., 2020).

In contrast to other audit solutions that have not exploited the opportunity to gain widespread use in SMP, the cloud-based audit management systems have become one of the most prevalent technologies that are currently being implemented in SMPs. The rationale behind this is due to the fact that cloud-based audit solutions offer cost-effective and scalable access to audit management over the Internet-based interfaces without the need to invest in the expensive IT infrastructure (Zulkifli & Abas, 2022). Cloud-based audit solution has been particularly convenient to SMEs since the time, when the COVID-19 pandemic was in place due to the limited physical access to the premises that further catalysed its use after the pandemic ended. Regarding the case of SMEs with limited resources, pay-as-you-go price would be more beneficial than an enterprise software solution.

Despite the obviousness of the benefits of these technologies, adoption rates have been uneven with one type of organization to another, and one geographical region to another. Audit organizations that operate internationally have always been at the forefront in terms of technology adoption, whereas smaller audit organizations, more so in the developing countries, have been way behind in terms of technology adoption due to various causes including lack of resources, technical expertise, organizational culture, lack of regulatory clarity etc (McClure & Gerdau, 2026).

 2.2 Audit Quality

Audit quality is one of the concepts in the accounting literature that are most researched but least understood. Using the original conceptualization proposed by Messier et al. (2025), the term audit quality can be defined as the likelihood that the auditor will materially report a misstatement in the financial statements of his/her client. Audit quality in this conceptualization may be considered in terms of two aspects of competencies: technical expertise necessary to identify misstatements and independence which provides auditors with the opportunity to report such misstatements. Although the above-mentioned conceptualization is quite influential, researchers believe that there are other elements of audit quality that need to be considered.

The challenges brought about by the (IAASB, 2016) audit quality framework are a more detailed and multi-faceted structure of audit quality consisting of three components such as the input factors including auditor expertise, ethics, and organizational culture; process factors comprising audit approach, control mechanisms, and engagement oversight; and output factors including audit documents, communications with those who are accountable in governance, and the quality of the accounting statements. The concept of such a multi-layered concept will prove particularly useful to the current research as it will be able to incorporate a lot of the emergent technologies as process-based factors which will come in handy in order to help improve the quality of the output measures of the audit.

It is possible to have a few antecedents to audit quality which have been identified in the prior literature. Experience and competence of the auditor have been found to be relevant positive determinants of audit quality and experienced auditors turned out to be better in the determination of risks and their illustration of professionalism (Shawaqfed et al., 2026). Audit firm size is another variable that is positively correlated with audit quality in that a large audit firm has an advantage to high quality because of their resources, specialisation, quality control systems and reputation which will encourage them to deliver higher quality (Ariciu et al., 2026). Small size of firms cannot be considered as the only determinant though since small audit firms can go through such difficulties due to personal contact with the client and the partner in charge, respectively.

In still more recent times, researchers have examined the added value of technology as a still new variable that plays out in an impact on the quality of audits. Appelbaum et al. (2018) note that the use of data analytics and error detection and auditing accuracy are positively and significantly correlated. Moreover, Li (2026) disclose that the execution of artificial intelligence in audit instruments exterminates the potential human aspect of cognitive errors in audit analyses and enhances the regularity as an element of audit conclusions. As the discussion above shows, the answer to the question whether the ability to raise the audit quality can be leveraged by the adoption of technology is yes, but the terms in which such and such capability can be used should be further investigated.

2.3 Relationship Between Emerging Audit Technology Adoption and Audit Quality

The relationship between the utilization of audit technologies and audit quality has gained more academic attention in recent years. The application of technologies, according to theory, supported by TAM and RBV, enhances the capability of the auditor since it enables less cognitively intensive tasks to be automated, allows a more comprehensive review of data, and enables more complex risk assessments, which in turn free up the mental capacity of the auditor to do more advanced work in terms of judgment work (Abdullah & Almaqtari, 2024). As such, better audit quality is attained when the increased capability is translated into better audit quality, which can be observed in the form of improvement of error detection, adherence to auditing regulations and reduced material misstatements in the financial statements.

There are increasing evidences supporting this opinion. As an example, Appelbaum et al. (2018) observed that the adoption of data analytics by audit firms working in the US has a positive and significant correlation with the audit quality outcomes; in this case, the audit firms were found to be more at the forefront in detecting cases of fraud, in addition to producing more accurate financial statements than their counterparts that had not adopted data analytics. Also, Isa & Subramanian (2024) found that the use of continuous monitoring tools led to a lower rate of client restatement and audit deficiencies among regulators. Finally, Abullah & Almaqtari (2024) discovered that AI-driven audit tools enhanced reliability of audit risk assessment by reducing individual judgment bias.

Hasan et al. (2020), for example, in Malaysia, carried out an exploratory study to examine the adoption of technology by Malaysian audit firms and observed that audit firms adopting a greater degree of technology had a reduced number of audit deficiencies and high client satisfaction scores in survey research after engagement. A continuation of that research work, Ammeran et al. (2023) conducted a study in Malaysia to investigate the importance of digitalisation as far as the promotion of the competitiveness of the Malaysian SMPs is concerned and observed that technology usage was positively related with the effectiveness and efficiency of the service quality. However, these two works have been marred with some significant shortcomings like small sample size, convenience sampling and absence of moderation.

2.4 Implementation Barriers to Audit Technology Adoption in SMPs

The limited literature available indicates that despite the numerous advantages of implementing audit technology in organisations, there are several barriers that can be encountered within organizations which hinder its implementation. These barriers do not happen by chance but are inherent barriers due to the organizational structure and other features of small audit firms. This study has come up with four broad forms of obstacles to the adoption of audit technology.

2.4.1 Financial Constraints

One of the most commonly reported obstacles for the uptake of technology by SMPs is related to financial constraints. Complex audit programs, state-of-the-art AI services and cloud-based audit management software typically demand an initial payment to license as well as costs of customization, hardware enhancement and periodic maintenance which even in small companies may be too high to afford to their limited budgets. Zulkifli & Abas (2022) emphasize that to date, the issue of cost is seen by up to 67 percent of Malaysian SMPs as one of the primary reasons why it turns out to be quite difficult to implement the technology in the practice. The identical conclusion may be drawn, depending on the findings of the international survey of SMPs developed by IFAC (2021) where financial constraints became the most discussed barrier to using technology in business practices in different countries. The problem of uncertainty of returns on investment in high-technology makes it even more difficult to convince partners in this issue by SMPs.

2.4.2 Lack of Technical Expertise

The existence of a severe and constant shortfall of technically competent staff in SMPs is the second significant implementation challenge. The proactive utilization and application of AI-powered audit analytics software, blockchain verification software and cloud-based auditing software requires technical skills in data science, coding languages (e.g., Python and R), database management, and online auditing methods, which are currently not taught through formal education in mainstream accounting courses in Malaysia (Habibullah et al., 2026). Siew et al. (2020) argue that the low level of self-efficacy among many SMP auditors in Malaysia does not pertain to the abstract concept of self-efficacy but rather to real challenges experienced by professionals. The built-in challenges facing SMPs in competing with massive corporations and the technology industry in attracting graduates with digital literacy skills only exacerbate this skill deficiency issue.

2.4.3 Resistance to Change

Other significant barrier to accepting audit technology in SMPs is resistance to organisational change. Many small organisations have been using audit methodologies, routines in the workplace and approaches to client interactions, over decades, and has been effective in delivering satisfactory results; it is not surprising therefore that people in those organisations are likely to be reluctant to abandon a method that works in exchange of a new approach that might pose unexpected challenges owing to its novelty (Shawaqfed et al., 2026). In addition, there is not enough information about the advantages that new technologies may benefit the firm with regard to clientele as a result of automation. As Habibullah et al. (2026) discovered, an intention to adopt technology is negatively correlated with change resistance, regardless of financial resource access and technological expertise, among Malaysian auditors.

2.4.4 Regulatory Uncertainty

The fourth factor pertains to uncertainties around the regulatory guidelines on the acceptable application of AI, data analytics, and other emerging technologies in professional audit practice. Though the ISAs do present a good framework of guidelines to perform traditional audits, there have been no updates to the framework which would suggest how AI-generated audit observations should be evaluated, documented, and communicated in an audit report (IAASB, 2016). The absence of active guidance on the application of emerging technologies in regulated audit engagements in Malaysia, both in terms of their provision by both MIA and the Audit Oversight Board (AOB) and the guidance itself, creates regulatory uncertainty in the minds of many SMP partners, who cannot bear the risk of having to overcome this regulatory uncertainty. Uncertain about the compliance of their use of AI or data analytics, audit firms are not likely to use the technology until clear regulatory signals are received (MOF, 2021).

2.5 Implementation Barriers on Technology-Quality Relationships

Though the relationship between the adoption of audit technology and audit quality has become somewhat empirically well-documented in the literature, the question of whether or not audit technology implementation barriers moderate the relationship between adoption by the audit firm and adoption by external auditors has received a relatively lesser amount of empirical scrutiny, therefore, creating a research gap that is what the current study aims to fill. Concentratively, it would be hypothetically questioned that any implementation barriers would dilute the existing correlation between the technology that was adopted, namely audit technology and audit quality as well as the overall audit process of the firm. Essentially, the result is that a firm adopting audit technology without benefiting because of improved audit quality, either because the people working there were not the right trained pioneers to use with the technology effectively, were financially constrained to train or get the technology integrated into the needs of the firm, faced organizational resistance as they sought to integrate the technology into the audit process, or was confronted with uncertainty in the regulatory environment and therefore selectively used the technology output.

The relationship that was predicted by the theory is congruent with contingency-based view about strategic management where the impact of organisational capabilities or tools on performance are not general in the sense as in the contingency-based view about strategic management (Habibullah et al., 2026). Following the nature of the SMP environment, all the four forms of barriers to implementation exist in large numbers, one can expect such contingency to be highly applicable here. This moderating impact explained in this study is consequently not only theoretically well-founded, but also highly relevant in practice to the Malaysian SMP environment. Previous researches in similar fields offer indirect but promising indications in support of this moderation hypothesis. Certain analysis of the study by Xuan et al. (2026) shows that the correlation between organizational capabilities and performance is commonly mediated by contextual barriers, which is of immense management significance. In the specific audit literature, Shawaqfeh et al. (2026) note that the positive relationship between adopting the internal auditing technologies and audit efficiency is significantly muted under resources constraints, which can be considered an analogy of the presented moderation hypothesis in the current research project.

2.6  Theoretical Framework

2.6.1 Technology Acceptance Model (TAM)

TAM which was originally suggested by (Davis, 1989) and later amended and expanded on by a number of researchers under a variety of conditions (Ammeran et al., 2023). As per the TAM, two fundamental beliefs, with regards to the application of the technology in question, are what predetermine whether or not the person in question is going to use the technology under consideration. The first one is termed as perceived usefulness (PU), which refers to the degree to which the individual feels that technology will enhance his /her work. Sounding rather different, the concept, perceived ease of use (PEOU), is whether or not he/she finds the use of the technology to be intellectually fatiguing. TAM also provides a theoretically sound and empirically robust theoretical construct within the auditing profession, which explains why some auditors and audit firms are likely to adopt new technology whilst other auditors and the audit firms show reluctance and resistance to calming down to adopt new technology. An auditor who perceives value in the use of AI-based analytical tools and cloud audit software, as well as believes that the new tools are easy enough to use, will have a greater probability of adopting and integrating new tools into the audit process, thus achieving benefits in terms of quality. In fact, when implementation barriers such as financial constraints, skills gaps, and regulatory obstacles undermine the perceived usefulness and perceived ease of use of new technologies among auditors, then implementation barriers become challenging to overcome, and, therefore, the benefits of quality can be gained by limited means.

2.6.2 Resource-based View Theory

On the other hand, Resource Based View (RBV) theory as it was initially advanced by  Barney et al. (2001) and later expanded by different researchers who have embarked on the study of strategic management was also another relevant theory that contributes to the theoretical background of the current research. According to RBV, the competitive advantage of organizations is attained through the ownership and proper utilization of the valuable resources within the organizations, which is also rare, difficult to duplicate and not easily substitutable (VRIN). As applied to auditing, RBV indicates that effective implementation of new technologies by auditors can result in the development of a valuable organisational competence (Zulkifli & Abas, 2022). Notably, RBV theory also notes that resources can be used to produce competitive advantages but only when the resources are well harnessed and combined with other complementary organizational resources and capabilities. This aspect is more than relevant to the moderation thesis to test in present study. Although the introduction of new audit technology (tangible resource) in an SMP may increase the quality of the audit, a deficiency of other complementary resources, such as technical expertise (human resource), financial ability to continue the investment (financial resource), and cultural predisposition towards innovation (social resource) would impede the efficient utilisation of technology. The lack of complementary resources and capabilities is merely an implementation problem, and this phenomenon is sure to undermine the relationship between adoption of technology and the quality of the audit. The moderation model proposed by the theory of TAM is therefore ideally in tandem with the RBV theory in that it views the process of technology adoption as an issue of resources.

2.7 Conceptual Framework

Based on the synthesis of the theoretical approaches represented by TAM and RBV perspectives, as well as the review of the literature done above, the following conceptual model representing the current research work can be developed. According to the model, an expected positive and direct relationship is supposed to exist between the appearance of the adoption of audit technologies (independent variable) and the quality of auditing (dependent variable) and the moderating influence of implementation barriers (moderating variable). In case there are low barriers to implementation, their adoption will have a strong positive impact on the quality of audit. In the event of high implementation barriers, this effect will be significantly lowered.

Table 1, Summary of Conceptual Framework

However, according to the above model, the influence of the moderating variable implies that two similar SMPs, which use equal amounts of technological knowledge, may have varied results in their audit quality due to the strength of implementation barriers they encounter. Such a relationship constitutes the main theory in this research, and is the core empirical issue that will be answered in Chapter 3 and other chapters.

Chapter 3: Research Methodology

3.1 Introduction

The methodology applied in researching the impact of adoption of new audit technology on the quality of auditing in Malaysian small and medium-sized practices (SMPs), and the moderating impact of barriers to the implementation are presented in a systematic manner. Things such as the philosophical approach, methodology approach, research strategy and design, the data gathering tool, Pilot testing, and the methods of data analysis have already been discussed and explained first the aspects of the population, sampling process, the data gathering tool, Pilot testing, and methods of data analysis. The rationale of each of these selections of methodology is given based on the aims of the project, the properties of the object of study, and the field convention in the sphere of audit and management studies. The ethical issues concerning the research process are explained in the final part of this chapter.

3.2 Research Philosophy

Positivism is the philosophy of research in the present study. This paradigm is informed by the assumptions that social and organisational objects can be objectively observed, measured and studied, and that a basis of knowledge is the empirical observations, hypothesis generation and testing, and deductive reasoning based on well defined theories (Saunders et al., 2024). Positivism has been the most appropriate study in this study due to a number of reasons. First, research questions that were developed in this study are hypothesis based and directional relationships of variables to be tested. Secondly, because the constructs that are under study in this research are technology adoption, barriers to the implementation and quality of audits, they can easily be quantified using Likert-type scales and therefore tend to prefer positivism. Thirdly, the possibility of generating generalisable knowledge out of the study is most probable within an objective methodology like positivism.

3.3 Research Approach

The research approach is a deductive research strategy which involves generation of hypotheses based on theory before data goes into collection and hypotheses are tested using quantitative data (Clark et al., 2021). The deductive approach applied by the study fits in the theoretical construct of TAM and RBV because these theories justify the proposed relationships theory a priori. This research approach also suits the research philosophy in that the deductive

approach to research enables the study to clearly make contributions to the theory base through supporting, refining, or rejecting the hypotheses proposed.

3.4 Research Strategy

The research strategy adopted in this study will be the survey research approach in which a structured self-report questionnaire will be administered to a non-random sample of the auditors in the Malaysian SMPs. The method to complete the survey research would be very suitable in this research because of a number of reasons. It will make it easy to acquire the quantitative data of a sizeable number of respondents at minimal expenses and within decent time frames, an important factor to an undergraduate final-year project (Bougie & Sekaran, 2020). Further it will make it possible to examine the perceptions, attitudes and behaviour in regards to all the three core variables simultaneously, which is an essential requirement in order to be able to test the moderating effect. Besides, the survey method has been widely applied in past related studies in the auditing literature (Appelbaum et al., 2018).

3.5 Research Design

The quantitative cross-sectional type of research design is proposed to be used in the proposed study. It is necessary to use a quantitative research design in this particular case since there is a need to quantify the extent of relationships between numeric variables and test directional hypotheses through inferential statistics (Creswell & Creswell, 2023). The constraints of a small time frame to collect the data, as defined in the context of an academic project, will lead to using the cross-sectional research design in the research. The cross-sectional design will entail information gathering on all respondents at a particular time. The adopted design aligns with the way other related studies have been carried out in the literature about audit technology (Hasan et al., 2020; Ammeran et al., 2023). The cross-sectional design does not permit cause-and-effect statements to be made but it is an effective design in the study of the relationship between variables of interest.

3.6 Population and Sampling

The sample population that is going to be the target of study is comprised of all the auditors, senior auditors and audit managers who are working in SMPs registered under the Malaysian Institute of Accountants (MIA) in Peninsular Malaysia. Going by the latest numbers provided by the MIA, it has about 2,800 registered audit firms in Malaysia of which about 90 percent are part of the category of SMPs, thus making an estimated total of 2,520 audit firms that can be considered towards the sample (MIA, 2025). Assuming the number of participants in each firm would be average of five, the projected population of accessible people would be an estimated 12,600 people.

Purposive sampling will be used, as it will allow sampling of respondents who have sufficient exposure to the audit procedures, and who have been introduced to some kind of innovative audit technology within their practice. The sampling technique is employed when the study is about individuals that have specific characteristics or experiences that are associated with the constructs being examined. The struggle to use a highly recognized formula to calculate the size of the sample, in this case, using the formula that was suggested by Krejcie & Morgan (1970) leads to the resulting value of 373 by considering the target population of 12,600 respondents with a 95-percent confidence level, and the margin of error value of 5 percent. Since practical constraints exist that could hinder quality research results such as time constraints, access constraints and low response rate are common in survey research with accountants as the sampling group. Reviewing the prior research conducted in Malaysia, researchers identified response rates of between 20% and 30% in online survey, and workplace. Thus, this study tries to obtain approximately 120 to 150 responses to the survey. In order to achieve this, 400 to 500 questionnaires will be mailed out.

The questionnaire will be distributed using two different channels. The first route is the usage of online surveying tool which will be disseminated via the official channels of the MIA, the LinkedIn groups of Malaysian accountants and auditors, the WhatsApp groups of professional accounting organizations. The second channel will be through the process of physical distribution of questionnaire during the CPD seminars organized by the MIA and audit practitioner workshops in the states during the period in which data were collected.

3.7 Research Instrument

The main tool for gathering data will be a self-administered questionnaire that consists of four different parts, each of which focuses on particular variables. To enhance the content validity and construct reliability, the developing measuring questions were based on validated questionnaires found in peer-reviewed articles. This questionnaire is approximated to take about 15 minutes to take.

3.7.1 Section A: Demographic Profile

The information gathered in Section A is background and demographic details of the respondents and includes but is not limited to professional designation of the responding member of the audit firm, years of experience in the field of auditing, number of partners in the audit firm, state, highest educational level and highest professional level and area of specialization of the industry of the major clientele. In this section, there are six questions, which use both nominal and ordinal scales of measurement.

3.7.2 Section B: Emerging Audit Technology Adoption

Measurements in section B gauge the extent of adoption of emerging audit technology by the use of a 15-item scale that was developed from the work of Qasim & Kharbat (2019) and Appelbaum et al. (2018). Questions are set to determine to which extent the following technologies are involved in the audit process: audit software, audit tools offering artificial intelligence, cloud audit platform, robotic process automation tools and digital confirmation techniques. The responses of the respondents will be rated on a scale of 1 (Never) to 5 (Always). All 15 questions will be scored to get a single technology adoption score.

3.7.3 Section C: Implementation Barriers

Implementation Barriers in Section C is an assessment of the four aspects of implementation barriers through a scale of 20 questions based on Habibullah et al. (2026) and Zulkifli & Abas (2022). Each dimension will include five questions to obtain financial, technological, change and regulatory aspects that may make the adoption process challenging. The statements are formulated in such a way as to measure how much of an obstacle each factor is to implementing ATs in the respondent’s company. Answers are measured using a five-point Likert scale, with options for “Strongly Disagree” to “Strongly Agree.”

3.7.4 Section D: Audit Quality

Considers audit quality outcomes through the prism of 12 questions that are being modified in accordance with the work of Messier et al. (2025) and Shawaqfeh et al. (2026). The items explore different areas of audit quality using self-reported measures, which include measures such as detection of error/anomaly, adherence to ISAs and MIA professional standards, good audit documentation, perception towards audit partners by clients, and number of adjustments made after an engagement. The responses will be gathered with the five-point Likert scale rating each statement, where 1 will represent “Strongly Disagree” and 5 will represent “Strongly Agree’. The multi-dimensionality of the audit quality in accordance with Chapter 1, not to mention the IAASB (2016), explains the presence of the collection of the various indicators of the quality of the performed audits.

3.8 Pilot Study

Before deploying the survey instruments, a pilot study will be conducted using a sample of 30 respondents from the target population, but not included in the sample of the study. The pilot study is a crucial part of the research process as it could possibly help identify whether the questions provided in the survey are clear, easily understandable and suitable within the context of the Malaysian SMP participants. It can also offer initial psychometric information in gauging the dependability of the scales. We will calculate and analyse the Cronbachs alpha coefficients of all the scales. Any scales with a coefficient lower than the traditional 0.70 will undergo scrutiny, adjustment, or any other measure .

3.9 Data Analysis

All data gathered will be coded, cleaned and analysed through Microsoft excel in making both descriptive and inferential analysis. Four consecutive steps will compose the data analysis process, as listed below.

3.9.1 Descriptive Statistics

Frequencies, percentages, mean, standard deviation, mini-max range, and a test of normality (Kolmogorov-Smirnov and Shapiro-Wilk) will be computed on a variable by variable basis in the study as well as on demographic characteristics. Such statistics are utilized to create a profile of the data sample and have an idea of what the distributions of the measured constructs in the study were.

3.9.2 Common Method Bias Assessment

In light of the nature of cross-sectional and single-source data, the single factor test by Harman will be conducted as the preliminary stage of detecting the bias in common method. In case one factor can explain more than 50 percent of the total variation obtained through the unrotated factor analysis, common method bias is of a great concern, and additional corrective actions, such as using latent unmeasured factor model need to be made (Xuan et al., 2026).

3.9.3 Hypothesis Testing

The tests for hypothesis will be done via hierarchical multiple regression using SPSS. The testing of the H1, which entails the positive relationship among technology adoption, audit quality will be done by estimating simple regression, where audit quality will be a regression on the adoption of emerging audit technologies. The statistically significant positive value of the regression coefficient of the technology adoption will be considered to have provided enough support for H1. To compare H2 in the form of moderating implementation barriers, a moderated regression will be conducted in accordance to the stipulated steps to be followed when carrying out a moderated regression (Fiedler & Sivo, 2015). The initial step is to conduct a regression analysis with the use of demographic variables as the control variables. Secondly, the inputs in the independent variable (technology adoption) and moderator (implementation barriers) are inputted as one. Lastly, the interaction term, between the independent and moderator variables, would be the product of the mean-centred scores of both the independent and moderator variables, and then added to the regression equation. A negative yet statistically significant regression coefficient (p < 0.05) of the interaction term indicates the evidence of the moderating role of the moderator variable on the relationship of technology adoption and auditing quality. The moderation will also be illustrated by graphing the technology adoptionas a factor of quality relation at one standard deviation above and below the mean values of the barriers to technology adoption.

3.10 Ethical Considerations

This study is in full compliance with the ethics policy that is outlined in the APU Research Ethics Framework, and the general ethics policies outlined in the BERA ethical guidelines to research. The APU Research Ethics Committee would have been asked to issue an appropriate clearance before any data collection would be accompanied to ensure that all its data collection operations are conducted in compliance with such a requirement. All respondents will be requested to answer the questionnaire only after giving their consent. In the instance of the online survey, the information telling page will be used to inform the respondents of the purpose of the research, the nature of participation, voluntary nature of participation, and their rights to drop out of a study without any prejudice at any point during the study. The respondents will be required to explicitly express their agreement with participation in the research by clicking on a consent box to be displayed in front of the questions.

To address data confidentiality and anonymity, the researcher will not request any personally identifying information (such as names, company names, or personal contacts) in any part of the research process. The data will be stored electronically in anonymized and password-protected files accessible only to the main researcher and faculty advisor. The survey data will be maintained by keeping the survey data which will last five years as per the APU research data management policy after which all survey data will be permanently deleted. The findings of the study will be circulated at the aggregate level and none person or a business entity can be identified through publication of the results of the study