（2006）Automatic Formulation of the Auditor’s Opinion with AREX：With an Application to Egypt.pdfVIP

Automatic Formulation of the Auditor’s Opinion with AREX: With an Application to Egypt Mohamed A. Wahdan Menoufia University, Egypt - Maastricht School of Management, The Netherlands (wahdan@msm.nl) Pieter Spronck IKAT, Faculty of Liberal Arts and Sciences, Universiteit Maastricht, The Netherlands Hamdi F. Ali Maastricht School of Management, The Netherlands Eddy Vaassen AIM, Faculty of Economics, Universiteit Maastricht, The Netherlands H. Jaap van den Herik IKAT, Faculty of Liberal Arts and Sciences, Universiteit Maastricht, The Netherlands Abstract This paper reports on research of knowledge-based systems (KBS) in auditing. It focuses on constructing, implementing, and validating a KBS that aims at helping auditors formulate their opinions on financial statements. To formulate their opinions, auditors use a “personal-judgement” approach, which is heavily depended on their experience and expertise. The approach has four drawbacks: (1) it is ineffective (2) it may lead to different decisions, (3) it suffers from personal bias, and (4) it may even generate misleading judgements. Therefore, the challenging questions are: (1) To what extent is it possible to automate the formulation of the auditor’s opinion? and (2) To what extent is a KBS effective, efficient, and acceptable as a tool to formulate the auditor’s opinion? This paper focuses on constructing, implementing, and validating a KBS, called “Auditor’s Report EXpert” (AREX), to formulate the auditor’s opinion on financial statements. The knowle