Artificial Intelligence for Audit, Forensic Accounting, and Valuation

CHAPTER 15Tying It Together and Robots

THIS IS THE LAST CHAPTER of Part Three, and in this I wanted to bring various concepts together to enable you to approach your audit automation needs from the perspective of a combination of various capabilities. In addition, I will provide a short introduction to robots.

CYCLES OF AUDIT

Both audit and forensic inquiry often require digging deeper into various accounts. Machine learning improves accounting estimates (Ding et al., 2019). Accounting estimates are a critical part of financial statement generation. However, estimation errors impact financial reports. Ding et al. found that machine learning techniques can improve estimates and enhance the usefulness of financial information. Estimation includes accruals and other adjustments (Chen and Li, 2013). In this chapter we will take a look at various automations of processes in accordance with different cycles.

We approach it through the lens of the Infinity Cycle. In Figure 15.1, the left loop, that is, the operations loop has three cycles: Revenue Cycle, Production Cycle, and Procurement/SC Cycle. The Investment Loop has three cycles: Financing, M&A, and Capital Structure Management. The Control Loop has Planning, Strategy, Governance, Incentives and Compensation, and Capital Allocation.

FIGURE 15.1 The Cycles of Audit

PRMIT Model

For each of the cycles in the Infinity Cycle, ...