CPAS/CCM experiences: Perspectives for AI/ES research in accounting

https://egrove.olemiss.edu/dl_proceedings/1111/thumbnail.jp

Information Processing in a Simulated Stock Market Environment

This paper describes three studies aimed toward the understanding of human information processing within a simulated stock market environment. Initially, a series of studies in Human Information Processing (HIP) in accounting are summarized, key stating the various approaches, key concepts, and variables. In addition a symbolic model with which to analyze HIP processes in an experimental setting is proposed. Secondly, the stock market simulation is described, with emphasis on its inain methodological advantages and shortcomings. The third section presents details of three implementations of the simulation, summarizing the main similarities and differences. The fourth part analyzes, in a comparative framework, the experimental results obtained for the three experiments performed. The last part of the paper discusses the implications and potential generalizability of these results and outlines paths for future research. The tentative results favor the utilization of a cross-experimental methodology as conclusions are similar for the three stock market simulations. Effects are found concernng subject motivation toward financial rewards and subject attitude changes during the experiment, while little, if any, effects of cognitive style on the decision process are observed. A series of regression modeling attempts are described with mixed results

Taxonomization of internal controls and errors for audit research

https://egrove.olemiss.edu/dl_proceedings/1125/thumbnail.jp

Discussant\u27s response to Neural nets versus logistic regression: A comparison of each model\u27s ability to predict commercial bank failures

https://egrove.olemiss.edu/dl_proceedings/1082/thumbnail.jp

Reengineering business reporting creating a test bed for technology driven reporting

Building on the work originally done for the Enhanced Business Reporting consortium of the AICPA, this paper develops a test bed for innovation in business reporting. As with flying test beds in aviation, the object is to explore the impact of new technologies and techniques rather than to create a product intended for immediate implementation. The starting point of our analysis is that if the financial reporting system was being built from scratch today, it would look very different, taking into account fundamental changes in the two drivers of financial reporting: First, the dominance of market making by professional investors, which includes such intermediaries as pension and mutual funds, which is how most ordinary individuals interact with the market; Second, the reduction in the variable costs of disclosures to technology-enabled firms, while time taking a broader view of the cost of reporting to include the opportunity cost to the firm from faulty disclosures and the cost to professional investors of having to extract the data they need from statements that were not designed for their needs. Taken together, the consequence of these two changes is that a system being designed today has to rethink the entire process by which financial data held by the firm is translated into decision relevant information by users. This process takes place both within the firm and outside of it, with a handover of financial statements taking place at the boundary between the firm and its users. Given these changes it is time to ask whether the location of that handover boundary point is still appropriate: whether the firm should continue to aggregate and condense information extensively before releasing it, or whether sophisticated users would prefer to have access to more information in closer to its raw format so that they can manipulate and aggregate it as they see fit. Based on this conceptual model we discuss the building blocks of a 21st century reporting system and the technical architecture needed to implement it. It is our hope that this paper will help create an open source test bed that will develop new ways to measure, manage and communicate firm performance in the 21st century.Creándose en el trabajo hecho originalmente por Enhanced Business Reporting Consortium de la AICPA (una iniciativa colaborativa y dirigida al comercio en el que los usuarios y los proveedores del capital trabajan juntos), este artículo desarrolla un banco de prueba para esta innovación. Como con los bancos de prueba que vuelan en la aviación, el objetivo es explorar el impacto de nuevas tecnologías y técnicas, en vez de crear un producto para una implementación inmediata. El punto de inicio de nuestro análisis es aquel en el que si el sistema de elaboración de informes financieros estuviera siendo creado desde cero hoy en día, se vería muy diferente, teniendo en cuenta los cambios fundamentales en los dos impulsores de estos informes. Primeramente, el dominio de la creación de mercados por parte de inversores profesionales, que incluye intermediarios como fondos de pensión y mutuos, siendo la forma más ordinaria en la que estos interactúan con el mercado. En segundo lugar, la reducción de los costes variables de las divulgaciones a empresas con tecnología, mientras se adopta una visión más amplia del coste de la elaboración de informes, con el propósito de incluir el coste de oportunidad a la empresa desde divulgaciones defectuosas, y el coste a inversores profesionales en extraer la información necesaria de las declaraciones que n no están diseñadas para sus necesidades. Como consecuencia a estos dos sistemas, un sistema que está siendo diseñado hoy en día debe de reflexionar sobre el proceso completo, por el que la información financiera poseída por las empresas se traduce en la decisión de la información relevante por los usuarios. Este proceso sucede tanto dentro como fuera de la firma, con una entrega de declaraciones financieras que toma lugar en el límite entre la firma y sus usuarios. Dados estos cambios, es hora de preguntarse si el lugar de esta entrega del punto límite es aún apropiado: si la firma debería continuar juntando y condensando información de forma extensiva antes de publicarla, o si los usuarios sofisticados preferirían tener acceso a más información más base para así poder manipularla y juntarla como ellos lo crean. Basado en este modelo conceptual, debatimos los bloques compilados de un sistema de informes del siglo XXI, y la arquitectura técnica necesaria para implementarlo. Es nuestra esperanza que este estudio ayudará a crear un banco de prueba de código abierto que desarrollará nuevas formas para medir, gestionar, y comunicar el desempeño de la firma en este siglo

Trends in the evolution of scholarly accounting thought: A quantitative examination

Contemporary Accounting Research (CAR) has expanded substantially in scope over the past two decades. This paper provides an overview of these trends using both quantitative techniques from statistics and exploratory data analysis (EDA). Articles in CAR are classified into taxonomies and the literature tracked over 22 years. Analysis focuses on four taxonomies: foundation discipline, school of thought, research method and mode of reasoning. The paper first examines journals vis-a-vis article publication frequency and dominant taxonomies. Secondly, three assertions concerning the relative posture of the Journal of Accounting Research and the literature are examined. Next the context of the literature is examined through major taxonomies and a crosstabulation of research method vs school of thought. The last part of the analysis focuses on trends within the taxonomies in the 1963-1984 period

Tracing the development of accounting thought by analyzing content, communication, and quality of accounting research over time

This paper analyzes the longitudinal development of accounting thought by characterizing the content of accounting research over several decades (1963 to 2003). The paper also investigates the interaction among accounting scholars and examines the relationship of research quality, topical coverage, methodological tools, and citation behavior. Thus, this analysis describes how accounting research has evolved, both in its content and in the way it has been used and perceived by its adherent scholars

Lessons for China and other developing economies from the crisis in US auditing

The continuing series of business scandals, from Enron to WorldCom have severely undermined the credibility of auditors and audited financial statements in the US. With developing economies such as China looking to emulate western models of corporate governance, what lessons should they draw from these apparent failures in auditing? There is a danger that those opposed to modernization of accounting and auditing will use these scandals as an excuse to delay the adoption of new standards and methods. Indeed, the Enron/Andersen scandal was apparently one reason that Chinese authorities watered down proposals to require firms seeking new Class-A shares to hire a foreign auditor to supplement their local auditor. In this paper we discuss a more productive lesson that developing countries seeking to bring their accounting infrastructure up to Western levels can draw from the recent US experience, using China as a case study. China is the most important of all developing economies, and its impending entry into the WTO makes reform there particularly urgent. The path that China takes is also likely to serve as a role model for much of the rest of the developing world, especially in South East Asia. We argue that developing countries have the opportunity to “leapfrog” existing auditing techniques in the West that have proven to have serious shortcomings, and instead, go straight to the cutting edge methodologies of continuous assurance and tertiary logging. Continuous assurance is a type of auditing which, by making use of the “electronization” of the firm, produces audit results simultaneously with, or a short period of time after, the occurrence of relevant events. In comparison with the traditional financial statements audit, continuous assurance is distinguished by being timelier, more comprehensive, more accurate and more supportive of the management process. These capabilities are especially valuable for Chinese firms who face an environment with weaker legal, regulatory and management controls than in the West. However, the tenuous nature of The International Journal of Digital Accounting Research Vol. 3, No. 5, pp. 33-60 ISSN: 1577-8517 34 the auditing infrastructure in China makes it essential that it also adopts tertiary logging as a way of “guarding the guards”. We discuss how logging the audit in a continuous assurance setting will increase the deterrence capability of peer review, as well as serving as a source of institutional memory in the case of mandated auditor rotation, the separation of auditing from consulting and the unique Chinese proposal for dual auditing.La constante serie de escándalos financieros, desde Enron a WorldCom, han perjudicado considerablemente la credibilidad de los auditores y las auditorías financieras en la US. Con economías desarrollándose como China imitando los modelos occidentales de gobierno corporativo, ¿qué lecciones deberían extraer de estos fracasos aparentes? Existe el peligro de que aquellos que se oponen a la modernización de la contabilidad utilicen estos escándalos como una excusa para aplazar la adopción de nuevos estándares y métodos. De hecho, el escándalo Enron/Andersen fue una de las razones por las que las autoridades chinas rechazaron propuestas que requerían la búsqueda de un auditor extranjero para complementar a su auditor local. En este artículo discutimos la productiva enseñanza de que los países en desarrollo que buscan alzar su estructura financiera a los niveles occidentales pueden aprender de la reciente experiencia americana, usando China como caso de estudio. China es la más importante de todas las economías del desarrollo, y su próxima entrada en el WTO hace que una reforma sea particularmente urgente. El camino que China siga probablemente servirá como modelo para el resto de países en desarrollo, especialmente en la Asia del sudeste. Debatimos si los países en Desarrollo tienen la oportunidad de hacer el “salto de rana” con respecto a las técnicas comerciales que en oriente han probado presentar serios problemas, y en su lugar, ir directos a las metodologías de filo cortante de constante asesoramiento e inserción de tertulias. El asesoramiento constante es un tipo de audición en el que mediante el uso de la “electronización” de la empresa, produce resultados de auditoría que simultáneamente, o un corto periodo de tiempo después, comparables con la ocurrencia de sucesos importantes. En comparación el sistema tradicional financiero, el asesoramiento continuo es distinguible por ser flexible en el tiempo, más comprensivo, más acertado y por apoyar más el proceso de desarrollo. Estas capacidades son especialmente valiosas para las empresas chinas que afrontan su entorno con controles legales, reguladores y de gestión más débiles que en occidente. Aun así, la naturaleza tenaz de The International Journal of Digital Accounting Research Vol. 3, No. 5, pp. 33-60 ISSN: 1577-8517 34 declara que la infraestructura de gestión en China hace necesario adoptar la deforestación terciaria como una manera de “guardarse las espaldas”. Discutimos cómo hacer esto en un escenario de asesoramiento constante incrementará la capacidad persuasiva de las reseñas de personal, así como servir como una fuente de memoria institucional en el caso de que se necesitase una rotación de auditores, o la separación de la auditoría con respecto a las consultas y la propuesta única de China acerca de la auditoría dual

The Textual Similarity of KAM Disclosures for Spanish Companies

We investigate and document the textual similarity of key audit matter (KAM) disclosures by using KAM items in auditor’s reports of Spanish companies in fiscal years 2017 and 2018. The main objective is to understand how similar KAMs are disclosed from one year to another. Following prior literature, we use the cosine similarity to measure the textual similarity between KAM items in terms of word usage. We classify and analyze KAM items for two consecutive years based on the following three combinations: (1) KAM topic, (2) KAM topic and auditor, and (3) KAM topic, auditor, and industry of the client being audited. The results indicate that auditors from the same accounting firm tend to have a recurring textual similarity under each KAM topic, and such similarity increases for clients within the same industry. The results add empirical evidence to the understanding of the recurring textual similarity of KAM disclosure

Federated Continual Learning to Detect Accounting Anomalies in Financial Auditing

The International Standards on Auditing require auditors to collect reasonable assurance that financial statements are free of material misstatement. At the same time, a central objective of Continuous Assurance is the real-time assessment of digital accounting journal entries. Recently, driven by the advances in artificial intelligence, Deep Learning techniques have emerged in financial auditing to examine vast quantities of accounting data. However, learning highly adaptive audit models in decentralised and dynamic settings remains challenging. It requires the study of data distribution shifts over multiple clients and time periods. In this work, we propose a Federated Continual Learning framework enabling auditors to learn audit models from decentral clients continuously. We evaluate the framework's ability to detect accounting anomalies in common scenarios of organizational activity. Our empirical results, using real-world datasets and combined federated continual learning strategies, demonstrate the learned model's ability to detect anomalies in audit settings of data distribution shifts.Comment: 6 pages (excl. appendix), 5 figures, 1 table, preprint version, currently under revie