|Unsupervised anomaly detection for internal auditing: Literature review and research agenda|
Jakob Nonnenmacher and Jorge Marx Gómez
Published January 2021
Auditing has to adapt to the growing amounts of data caused by digital transformation. One approach to address this and to test the full audit data population is to apply rules to the data. A disadvantage of this is that rules most likely only find errors, mistakes or deviations which were already anticipated by the auditor. Unsupervised anomaly detection can go beyond those capabilities and detect novel process deviations or new fraud attempts. We conducted a systematic review of existing studies which apply unsupervised anomaly detection in an auditing context. The results reveal that most of the studies develop an approach for only one specific dataset and do not address the integration into the audit process or how the results should be best presented to the auditor. We therefore develop a research agenda addressing both the generalizability of unsupervised anomaly detection in auditing and the preparation of results for auditors.
|How internal audit can champion continuous monitoring in a business operation via visual reporting and overcome barriers to success |
Stacie Tronto and Brenda L. Killingsworth
Published March 2021
Many auditing professionals would contend that continuous monitoring is a function of management and not internal audit. However, effective continuous auditing is highly dependent upon a strong continuous monitoring system. Further, by integrating technology of these two systems, continuous assurance can be achieved, and audit efficiency and effectiveness can be improved through the reduction of costs and effort. This paper discusses how internal audit can collaborate with a business operation to develop a continuous monitoring application utilizing visual reporting and overcome the potential barriers to success. The specific business operation selected for modification was the procurement card program at a large public university. Following an introduction of the scenario, an overview of the ProCard™ program is provided, highlighting the program risks and controls. Third, a four-phased approach used to develop the continuous monitoring tool is described, including specific steps taken to ensure effective use of the real-time data by auditors. Fourth, challenges the internal function encountered when implementing the system are described, including how those challenges were addressed. Fifth, the paper provides concluding comments and future initiatives planned. Finally, the paper provides additional examples for continuous auditing and monitoring and suggests future research topics in this area.
|The effect of emergent technologies on accountant`s ethical blindness |
Karma Sherif and Hania Mohsin
Published April 2021
The accounting field has come under scrutiny after a number of high-profile ethical scandals dealing with organizational fraud has been tied to the profession. While several accounting standards have been established to ensure the integrity, objectivity, and professional competency of accountants; the power of the situation and individual motivations are challenges that may ethically blind accountants and result in fraud. In this paper, we explore the combinative effect of three emergent technologies: Blockchain-based, IoT-enabled and AI-empowered distributed ledger on reducing the risk of accounting ethical blindness. We examine how technical features of emergent technologies present both gains and challenges to ethical decision-making for the accounting profession. While some of these challenges can be overcome by adopting all three emerging technologies, others require social and legal interference to avoid the challenges of these technologies.
|Audit and tax in the context of emerging technologies: A retrospective analysis, current trends, and future opportunities|
Osama F. Atayah and
Muneer M. Alshater
Published May 2021
This study aims to review the existing literature on audit and tax in the context of emerging technologies, besides providing future research agenda. A meta literature approach by combining bibliometrics and content analysis was adopted to analyse 154 relevant English articles published in Scopus indexed journals, published over the last 35 years. Using RStudio, VOSviewer, and Microsoft Excel. Quantitative findings reveal that the USA is the top contributor and the most cited in the world. Brigham Young University, on the institutional level, is the most relevant affiliation. Concerning publication number, the Journal of Emerging Technologies in Accounting is the most relevant source. At the same time, the most cited source is the Decision Sciences journal. While the most prolific author is Miklos Vasarhelyi. Moreover, the emerging technologies, including big data, blockchain and artificial intelligence, have significantly drawn accounting scholars interest from 2015 and thereafter. From the perspective of qualitative findings, the main focus shows that employing advanced technologies offers promising opportunities to mitigate the risk of tax evasion and enhance the auditors` efficiency. The content analysis reports two mainstreams tax and audit; each one is classified into three sub-streams, big data, artificial intelligence, and blockchain. This study contributes to present a clear and coherent understanding of the relevant exact literature and propose future research. However, the study reviewers confines only on audit and tax fields, relying on the Scopus database.
|Decentralized finance & accounting - Implications, considerations, and opportunities for development|
Sean Stein Smith
Published July 2021
The blockchain and cryptoasset sector, since coming to the attention of the mainstream business and financial markets during the bitcoin bull run of 2017, continues to accelerate and evolve rapidly. Decentralized finance (DeFi), a new iteration of what was previously referred to as open finance, has emerged as an innovative use case and service enabled by blockchain technology. As with any innovation or new tool, however, there remains a range of questions and considerations that will have to be addressed prior to wider adoption and utilization. This research attempts to contextualize the development of DeFi, frame it within the blockchain and cryptoasset sector, and explain potential obstacles and challenges to further development. Subsequent to this examination of DeFi trends, challenges, and opportunities, a potential framework for further development and implementation will be presented. Outlined and written in a manner approachable to both practitioners and academic users, this research should be used a springboard for further discussion, analysis, and progress.
| On the impact of smart contracts on auditing|
Javier De Andrés and
Published September 2021
The use of smart contracts has grown exponentially over the last few years. This is a phenomenon associated with the development of other technologies, such as the blockchain and the Internet of Things (IoT). Smart contracts run in a decentralized way on the blockchain and are self- executing. This is a source of advantages in business operations, but there are also some limitations and drawbacks. Regulatory issues are also of key importance, as the legal frameworks differ across countries. Smart contracts are likely to have an impact on external auditing, as external auditors will have to adapt their capabilities and procedures to an environment where many companies use this technology. But smart contracts may also be used to define a framework which ensures continuous audit reports and direct access of authorized stakeholders to the results of audit procedures. Conversely, internal auditing will also experiment changes, both caused by a series of new risks that will have to be adequately addressed and new tools to monitor business operations. In addition, some promising research opportunities arise, both in the IT, the Legal and the Business field.
|The textual similarity of KAM disclosures for Spanish companies|
Cleber Beretta Custodio and
Miklos A. Vasarhelyi.
Published November 2021
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 disclosures.
|Big data and accounting: a bibliometric study|
Palmira Piedepalumbo and
Published December 2021
Over the years, the importance and role of Big Data have grown considerably. Accountants’
work requires sound judgement and decision making, which makes their activities less conducive to
automation. Nonetheless, it is useful for accountants to be at ease with the use of data analysis,
especially when data are unstructured and relevant to decision making. This study aimed to visualize
the research panorama on the theme “Big Data and accounting” to appreciate the current state of
knowledge in this field. Bibliometric analysis was used to study literature on the topic of Big Data
and accounting. The data were collected using the Scopus database to ascertain the authors, countries,
keywords and journals that have contributed the most to this body of knowledge. VOSviewer software
was used for data visualization. Through a visual analysis, the results reveal the current state of
knowledge on the theme of Big Data and accounting, with significant implications for future works
in this field. The findings also highlight the potential opportunities for future studies on this topic and
on peripheral themes.