Fraud risk judgment performance in public sector procurement: the effects of continuous audit technology, task structure and auditor expertise / Mohd Daniel Mohd Nassir

The high performance of government auditors’ fraud risk judgment can prevent
potential losses due to fraud and at the same time, identifies the activities that are
vulnerable to fraud risk. Prior studies have focused mainly on examining fraud model,
leaving examination on the process of fraud risk assessment mostly unexplored. The
government auditors often use their judgment in performing fraud risk assessment,
which influenced by three factors, namely, continuous audit technology, task structure
and auditor expertise. The use of continuous audit technology could optimise
performance through automation of the fraud risk assessment task. The objective of the
study is to examine the direct, interaction and mediation effects of the continuous audit
technology, task structure, auditor expertise, fraud risk indicator against the fraud risk
judgment performance by government auditors’ in public sector procurement. In the
context of continuous audit technology, the task-technology fit theory often used in the
information system literature provides a strong basis to explore in the auditing field.
Thus, this study applying the task technology fit theory in fraud risk assessment. The
task technology fit theory offers an in-depth understanding of the relationship between
continuous audit technology, task structure, auditor expertise, fraud risk indicator and
fraud risk judgment performance. This study covers two research design; the first
research design is an experiment using a factorial design of 2 X 2 X 2, and the second
research design is a questionnaire survey. One hundred fifty-one government auditors
participated in this study. The data were analysed using the Analysis of Variance
(ANOVA) and a partial least squares structural equation model (PLS-SEM). The result
of the study showed mixed results. In the direct effects continuous audit technology,
task structure and auditor expertise improve the fraud risk judgment performance.
While in the two-way interactions, continuous audit technology interacts with task
structure and task structure interacts with auditor expertise to improve the fraud risk
judgment performance. However, the results show there are no significant three-way
interactions of continuous audit technology, task structure, and auditor expertise
affecting fraud risk judgment performance. Further, the result of the study shows the
fraud risk indicator does not mediate the relationship between continuous audit
technology, task structure and auditor expertise with fraud risk judgment performance.
From the result, this study emphasises the auditor needs to train with the domain
knowledge of fraud risk even though continuous audit technology adopts in the fraud
risk assessment process. Further, the re-engineered of the less structure task should be
done to ensure the automation of the less structured task amenable with the continuous
audit technology. Since the Auditor General's Report is the most anticipated report by
the public, the government auditors’ low fraud risk judgment performance would reduce
public confidence on the government auditors’ competency and loss to the nations. The
use of continuous audit technology able to help the government auditors’improve fraud
risk judgment performance.