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City Research Online City, University of London Institutional Repository Citation: Ali, S.A.H. (1995). The impact of computer technology on accounting and auditing in the Middle East with special emphasis on Arabisation, transfer of technology and training. (Unpublished Doctoral thesis, City University London) This is the accepted version of the paper. This version of the publication may differ from the final published version. Permanent repository link: https://openaccess.city.ac.uk/id/eprint/7737/ Link to published version: Copyright: City Research Online aims to make research outputs of City, University of London available to a wider audience. Copyright and Moral Rights remain with the author(s) and/or copyright holders. URLs from City Research Online may be freely distributed and linked to. Reuse: Copies of full items can be used for personal research or study, educational, or not-for-profit purposes without prior permission or charge. 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City Research Online: http://openaccess.city.ac.uk/ [email protected] CITY University BUSINESS SCHOOL The Impact of Computer Technology on Accounting and Auditing in the Middle East with Special Emphasis on Arabisation, Transfer of Technology and Training Sami Abbas Hussain Ali lq016 A Thesis Submitted for the Degree of Doctor of Philosophy VOLUME I CONTENTS Page List of Figures 5 List of Tables 6-11 Acknowledgments 12 Abstract 1 3 CHAPTERS I INTRODUCTION 1.1 Background To Selected Number Of Countries In The Middle East 14 1.1.1 Demography Of The Region 15 1.1.1.1 Major Industrial and Economic Development Of Countries In The Region 1 6 1.1.1.2 The Accounting Profession 27 1.1.1.3 Education 30 1.1.1.4 Economic Prospective Of The GCC States 31 1.1.1.5 Economic Of The Region: A Historical Overview 37 1.1.2 Technical Aspiration Of The Countries In The Region 39 1.1.2.1 Introduction 39 1.1.2.2 Historical Background 40 1.1.2.3 Objectives 41 1.1.2.4 Methodology 41 1.1.2.5 The Status Of Information Technology In The Arab World 42 1.1.2.6 Applications 42 1.1.2.7 Employees 43 1.1.2.8 Current Development Capabilities 43 1.1.2.9 Analysing The Needs Of Arab Countries For Development 45 1.1.2.10 Areas Of Development 46 1.1.3 Western Influence On The Region 47 1.1.3.1 Users' Perspective 47 1.1.3.2 Hardware and Software Companies 48 1.1.3.3 Software Suppliers 50 1.1.3.4 Accounting Profession 51 1.1.4 Industrial and Commercial Opportunities In Government and Private Sectors 56 1.1.4.1 Introduction 56 1.1.4.2 Gulf Expatriate Work Force 56 1.1.4.3 The Scope For Computerisation 59 1.1.4.4 Size Of The Market To 1985 62 1.1.4.5 Size of the Market in the UAE 66 1.1.4.6 Banking 69 1.1.4.7 Construction 70 1.1.4.8 Travel 70 1.1.4.9 The Oil Sector 70 1.1.4.10 Education 71 1.1.4.11 Government 71 1.2 Purpose, Need and Limitations Of The Study 7 1 1.2.1 Purpose 71 1.2.2 The Need For The Study 72 1.2.3 Limitations 73 II HISTORICAL EVOLUTION OF COMPUTER TECHNOLOGY 2.1 Introduction 74 2.2 Historical Perspective 74 2.2.1 Overview 74 2.2.2 Current Hardware Development 76 1 Page 2.3 Historical Development Of Software 79 2.3.1 Introduction 79 2.3.2 Computers Operating Systems and Application Software 79 2.3.2.1 Programming Language 80 2.3.2.2 Application Software 80 2.3.2.3 System Software 81 2.4 Information Technology 81 2.4.1 Introduction 81 2.4.2 Evolution Of Standards 81 2.4.3 Information Technology Assessment and Adaptation In Organisations 82 2.5 Transfer Of Information Technology 93 2.6 Role Of The Transnational Corporations In The Transfer Of Information Technology 96 2.6.1 The Role Of Transnational Corporations In New Technologies 96 2.6.2 Transnational Technology Market 97 Annex Sales and Profit of Major Transnational Corporations in Electronics 102-105 DI THE INTERRELATIONSHIP BETWEEN INFORMATION TECHNOLOGY AND THE ACCOUNTING AND AUDITING PROFESSION IN THE MIDDLE EAST 3.1 Objective 106 3.2 The Current State Of The Accounting and Auditing Profession 106 3.2.1 Introduction 106 3.2.2 Current Trends In Public Accounting Practice 114 3.3 Automating the External and Internal Audit Function 116 3.3.1 The Role of Automated Audit Tools 116 3.3.2 Auditing with Computer 120 3.3.2.1 Introduction 120 3.3.2.2 Changes in Auditing Methodes and Skills Requirements 123 3.3.2.3 Auditing Skills Requirements 123 3.3.2.4 Automating The Internal Audit Function 126 3.3.2.5 The Internal Auditor's Role 126 3.4 Computer Control Guidelines 128 3.4.1 Audit Responsibilities 128 3.4.2 General Control Procedures 129 3.4.3 The Effect of Microcomputers on the Accounting System and Related Internal Controls 130 3.4.4 The Effect of a Microcomputer Environment on Audit Procedures 130 3.5 Local Area Networks 132 3.6 Conclusion 133 3.7 Research Hypotheses 135 3.7.1 Introduction 135 3.7.2 Experimental Investigation Relating to Computer Hardware and Software Users 136 3.7.3 Experimental Investigation Relating to the Auditing Profession 136 3.7.4 Experimental Investigation Relating to Colleges and Universities 137 3.7.5 Experimental Investigation Relating to Computer Hardware and Software Suppliers 137 3.7.6. Experimental Hypotheses 138 3.7.7 Formulation of Hypotheses 138 3.7.7.1 Hypotheses Relating to Arabisation 139 3.7.7.2 Hypotheses Relating to Transfer of Technology 139 3.7.7.3 Hypotheses Relating to Computer Training 140 2 Page IV RESEARCH METHODOLOGY 4.1 Introduction 141 4.2 Research Environment 142 4.2.1 The GCC Political, Social and Economical Environment 142 4.2.1.1 United Arab Emirates 144 4.2.1.2 Bahrain 144 4.2.1.3 Saudi Arabia 145 4.2.1.4 Oman 145 4.2.1.5 Qatar 146 4.2.1.6 Kuwait 146 4.2.2 Use Of Expatriate Workforce 146 4.2.3 Projections Of Gulf Populations 147 4.2.3.1 Demographic Growth 147 4.2.3.2 Expatriate Population 149 4.3 Research Targeted Population 152 4.3.1 Overall Population By Industry and Country 153 4.3.2 Computer Hardware and Software Users 154 4.3.3 External Audit Firms 155 4.3.4 Colleges and Universities 157 4.3.5 Computer Hardware and Software Suppliers 158 4.4 Approach 160 4.4.1 Phase I - Available Literature 160 4.4.2 Phase 11 -PilotPilot Study 160 4.4.3 Phase Tll - The Structured Questionnaire 160 4.4.4 Phase IV - Interviewing Through Research Interview Questionnaire 161 4.4.4.1 Development and Approval Process Of Research Interview Questionnaire 161 4.4.4.2 Development Of Interview Plan 163 4.4.4.3 Selected Organisations 164 4.4.4.4 Key Characteristics Of Individuals Interviewed 165 4.4.4.5 Conducting The Interviews and Interpreting The Data 165 V DESCRIPTIVE ANALYSIS OF DATA COLLECTED - PHASE THREE 5.1 Introduction 166 5.2 Sources Of Information On Targetted Audience for the Survey Questionnaire 166 5.2.1 Introduction 166 5.2.2 Main Sources Of Information On Computer Hardware and Software Suppliers 167 5.2.3 Telephone Directories Of Businesses In The Gulf 168 5.2.4 Other Sources 168 5.3 Overall Analysis Of Survey Responses 169 5.3.1 Introduction 169 5.3.2 Number Of Organisations Responded By Country 170 5.3.3 Number Of Organisations Responded By Sector Within Country 170 5.3.4 Language Of Administration 171 5.3.5 Composition Of Workforce By Nationality 173 5.3.6 Conclusion 180 5.4 Analysis Of Survey Responses - Computer Hardware and Software Users 180 5.4.1 Introduction 180 5.4.2 Analysis Of Users By Country 181 5.4.3 Analysis Of Application Systems and Users 182 5.4.4 Factors Limiting The Expansion Of Computer Accounting Systems In Arabic 184 5.4.5 Analysis Of Arabic Terms and Quality Of Language Used In Arabic Systems 191 3 Page 5.4.6 Computer Hardware 192 5.4.7 Language Of Operating Systems 192 5.4.8 Application Software Run On Main Computer 193 5.4.9 Application Software Run On The Organisation Equipment Other Than The Main Computer system 194 5.4.10 Use Of Consultants 195 5.4.11 Training On The Use Of Information Technology 197 5.4.12 Overall Assessment On The Ease Of Use and Implementation Of Accountining Systems 198 5.5 Analysis Of Survey Responses- Audit Firms 200 5.5.1 Introduction 200 5.5.2 Analysis Of Audit Firms Responses By Country 201 5.5.3 Analysis Of Language Users Of Computer Systems 201 5.5.4 Composition Of Audit Firms 202 5.5.5 Analysis Of Audit Clients 205 5.5.6 Analysis Of Qualified Audit Staff 206 5.5.7 Use Of Computer Technology By Audit Staff 207 5.5.8 Computer Applications Used 208 5.5.9 Staff Training 209 5.5.10 Computer Consultancy Provided To Clients 211 5.5.11 Client Training 212 5.5.12 Sources Of Training 214 5.6 Analysis Of Survey Responses - Colleges and Universities 215 5.6.1 Introduction 215 5.6.2 Analysis Of Respondents By Country 215 5.6.3 Language Of Administration 216 5.6.4 Users Of Computer Systems 217 5.6.5 Policies and Guidelines Concerning Computer Utilisation 217 5.6.6 Implementing Computer -Based Systems and /or Curricula 218 5.6.7 Factors Impacting On The Introduction Of Computer Education 220 5.6.8 Computer Co-Ordinator 222 5.6.9 Responsibility For Computer Education 223 5.6.10 Level Of Support For Computer Technology and Automation 224 5.6.11 Computer Literacy In Colleges and Universities 225 5.6.12 Instructional Applications 227 5.6.13 Type Of Computer Courses 228 5.6.14 Business Community Involvement 230 5.6.15 Level Of Motivation To Introduce Computer Technology 231 5.6.16 Computer Introduction Into Universities and Colleges 232 5.6.17 Role Of The Ministry Of Education In Computer Education 233 5.7 Analysis Of Responses - Computer Hardware and Software Suppliers 234 5.7.1 Introduction 234 5.7.2 Analysis Of Suppliers By Country 234 5.7.3 Language Of Administration 235 5.7.4 Composition Of Workforce By Nationality 236 5.7.5 Analysis Of Users and Their Language Of Operation 236 5.7.6 Scope Of Activities 237 5.7.7 Supply Of Hardware 237 5.7.8 Supply Of Software 239 5.7.9 Number Of Sites 241 5.7.10 Demand For Computerised Arabic Based Accounting Systems 241 5.7.11 Professional Advice On Computerisation 242 5.7.12 Supply Of Training Sources 242 4 LIST OF FIGURES Figure No.

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