When will a Computer Write the Auditor's Report?

Abstract

Most corporations are required by law to produce annual reports on their financial positions. These financial reports are accompanied by an auditor's report, which is an independent auditor's opinion on the fairness of the financial statements. To formulate their reports, auditors use a "personal-judgement" approach that heavily depends on their experience and expertise. This approach may be (1) ineffective and may lead to (2) different decisions, (3) personal bias, and (4) misleading judgements. These four drawbacks of a human auditor are a source of doubt and hesitation for every corporation. Therefore, the challenging question is: Can a computer do a better job? This paper focuses on the construction and implementation of a knowledge-based system, called the "Auditor's Report EXpert" (AREX), that is capable of formulating the opinion on financial statements, as expressed in the auditor's report. The knowledge used by AREX is acquired from the literature, and from a slate of practicing and academic auditors by means of questionnaires and in-depth interviews. A preliminary validation of AREX indicates that AREX is successful in performing the auditor's report task. Hence, we tentatively conclude that currently a computer program can support an auditor in his/her task. Moreover, in the foreseeable future (maybe in 2030), it is to be expected that a computer program can produce idiosyncratic auditor's reports that are effective, universal in their decisions, do not show a personal bias, and do not have misleading statements.

Analysis of Challenges and Difficulties in Implementing Information Systems Audit: A Narrative Literature Review

“…Similar definitions for auditing information systems are used in IT industry standards. For instance, the widely used standard "Systems and Software Engineering -Software Life Cycle Processes" states that an audit in the context of "Systems and Software Engineering" refers to an unbiased evaluation of software products and processes carried out by an authorized person in order to determine compliance with the requirements (ISO/IEC 12207:2008, 2008. Consequently, the focus of an IS audit is on the parts of the information systems that the organization uses.…”

The Impact of Continuous Auditing Technology in ERP System on Improving the Internal Audit Performance: A Field Study

“…Conditions must be presented by the IA to apply CA technology in ERP system, (Wahdan et al, 2005b) indicated knowledge based systems in auditing would be helpful in training auditors, standardizing the procedures and report, and filling part of the lack observed in expertise and experience and in the application of auditing standards, so there are several needs for improving IA performance:…”

Automatic Formulation of the Internal Control Report over Financial Reporting

“…ARICOFR is directed in particular to the auditing practice in Egypt. This nation may have only a limited number of qualified auditors who are sufficient in evaluating the internal controls, in particular in E-Commerce environment (Wahdan, et al, 2005;Wahdan, & Van den Herik, 2012).…”