（2005）When will a Computer Write the Auditors Report？.pdfVIP

Systemic Practice and Action Research, Vol. 18, No. 6, December 2005 ( C 2005) DOI: 10.1007/s11213-005-9467-1 When will a Computer Write the Auditor’s Report? Mohamed A. Wahdan,1,3 Pieter Spronck,2 Hamdi F. Ali,3 Eddy Vaassen,4 and H. Jaap Van Den Herik2,5 Received June 1, 2005; revised October 24, 2005 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