Roger S Debreceny
Nanyang Technological University
Glen L Gray
California State University, Northridge
Abstract: An Embedded Audit Module (EAM) is a software module that is integrated within an entitys application systems that functions as a detective control to monitor transactions that are expected to be material to the auditor. A number of commentators and reports from within the accounting profession have noted that EAMs and similar technologies are important building blocks in the process of constructing a continuous auditing framework. While there is a literature on EAMs stretching back for more than two decades, there is very little evidence of adoption of EAMs. The study adopts Rogers Diffusion of Innovation Model to provide a framework for understanding the current state of the adoption process. This study used two focus groups of internal auditors and information systems auditors to provide some preliminary evidence on facilitators and inhibitors regarding the adoption of EAMs. The interactions were facilitated by Groups Decision Support Systems. The focus groups suggested that the key facilitators of the adoption of EAMs included: (1) the increased complexity of the business environment, (2) the need to manage information overload, and (3) the potential reduction of fraud. Key inhibitors to the adoption of EAMs included: (1) a variety of human resource issues including the lack of training and appropriate business process expertise amongst audit personnel, (2) lack of dedicated EAM software, and (3) a highly uncertain relationship between the costs and benefits of adoption. In the brainstorming component of the focus group sessions, participants were particularly concerned about the need to explain the potential benefits of EAMs to top management and seek their support in its implementation.
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