Employing Generalized Audit Software in the Financial Services Sector: Challenges and Opportunities

Computer Assisted Audit Techniques (CAATs) encompass a range of computerized techniques that internal and external auditors use to facilitate their audit objectives. One of the most important CAATs is generalized audit software (GAS), which is a class of packaged software that allows auditors to interrogate a variety of databases, application software and other sources and then conduct analyses and audit routines on the extracted or live data. This study seeks to evaluate the nature and extent of the utilization of Computer Assisted Audit Techniques (CAATs) in financial institutions. In particular, this study establishes the extent and nature of use of GAS by bank internal auditors and their external auditors. The study is conducted with large local and international commercial banks in Singapore, a major financial center. Given the highly limited base of research on GAS in the financial services sector or other industry, we conduct exploratory qualitative research. We conduct depth interviews with both internal and external auditors. We find that the extent and range of use of GAS varies widely between the institutions in our sample. Internal auditors see GAS primarily as a tool for special investigations rather than as a foundation for their regular audit work. We establish that external auditors make no use of GAS, citing the inapplicability of this class of tool to the nature of testing the financial statement assertions or the extent or quality of computerized internal controls maintained by the bank. The study opens up a range of research challenges and opportunities.