The rapid development of artificial intelligence in the fourth industrial revolution has challenged
the whole society, especially in accounting and auditing fields. Accountants and auditors are
responsible for preparing and examining the financial records of companies. With the trend of
developing machine, there is software that has automated many accounting procedures such
as recording, posting, analyzing, preparing report, tax and audit process. This paper introduces
the present situation of the application of artificial intelligence in the field of accounting and
audit services. After that, it provides some suggestions for accounting and auditing fields in the
context of Vietnam.
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International Conference on Finance, Accounting and Auditing (ICFAA 2018)
November 23rd, 2018
Hanoi City, Vietnam
Artificial Intelligence in Accounting and Auditing: Some Solutions for
Vietnam
Nguyen Huu Anha
aNational Economics University
Submission day: 30/10/2018
Review day: 10/11/2018
Acceptance day: 15/11/2018
Abstract
The rapid development of artificial intelligence in the fourth industrial revolution has challenged
the whole society, especially in accounting and auditing fields. Accountants and auditors are
responsible for preparing and examining the financial records of companies. With the trend of
developing machine, there is software that has automated many accounting procedures such
as recording, posting, analyzing, preparing report, tax and audit process. This paper introduces
the present situation of the application of artificial intelligence in the field of accounting and
audit services. After that, it provides some suggestions for accounting and auditing fields in the
context of Vietnam.
Keywords: Artificial intelligence, Accounting, Auditing
1. Introduction
The fourth industrial revolution is occurring which is enabling businesses to
operate in significantly different ways; enabling technologies include artificial
intelligence, internetworked physical devices, cyber-physical systems, nanotechnology,
and biotechnology. In which, the concept of artificial intelligence (AI) is directly related to
accounting and auditing fields. It is not a new concept, it can be traced back from 1936, when
Alan Turing first suggested the idea of the Touring Machine which was the basis for theories
about computers. With the development of computers and program in the mid-20th century,
artificial intelligence is officially supported. Untill now, robots or machines have not quite
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taken over yet; however AI is presenting all over the fields, from personal digital assistants
like Siri in Iphones, Google assistant to report writing to IBM Watson which is a question-
answering computer system capable of answering questions . In other words, artificial
intelligence is a computer system that can transform human wisdom into productive forces
by means of technology (Razi and Madani, 2013) Through the application of artificial
intelligence, the user can break the traditional information transmission process due to the
transmission speed, cost and quality of a series of bottlenecks between the problems.
Recent progress in AI has been based on techniques such as machine learning and
deep learning, whereby algorithms learn how to do things, such as classify objects or predict
values, through statistical analysis of large amounts of data, rather than through explicit
programming. Therefore, AI can transform and disrupt all the sectors of the economy from
technology to finance, communications, energy, healthcare or manufacturing, etc.
Professional accountants and accounting practices, procedures, and processes will need to
adapt, especially education and traning of professional accountants (Amin and Mohamed,
2016)
2. AI in Accounting
The role of accountants is to apply their knowledge about accounting and finance to
help business and stakeholders make better decisions. It means they need to capture, prepare,
check and communicate information to analysis and make decisions. With technology
improved, accountants can provide better and cheaper data to support decision-making;
generate new insights from the analysis of data and saving time for other tasks such as
strategy development, relationship building, etc. Up untill now, there are still limited use of
AI in real-world accounting. The first application is using machine learning to code
accounting entries and improve on the accuracy of rules-based approaches though
accounting softwares, enabling greater automation of processes (McCabe, 2014). Secondly,
accountant can detect quickly accounting fraud and some machine learning models can
predict better fraudulent activities. Also, accountants can use machine learning-based
predictive models to forecast revenues. As can be seen, accountants are encountering
machine learning without realising it. In the future, AI can be applied better such as: in
managerial accounting, big data will vastly improve effective management control systems
and budgeting processes. In financial accounting big data will bring forth relevent
accounting information, thereby enhancing transparency and stakeholder decision making.
Besides, there is a concept of blockchain. Currently, business and consumers use a trusted
party to make transactions like a bank. (McCabe, 2014). However, blockchain is used as a
digital ledger worked by a network authorized computers. It helps customers and business
connect directly. As a digital ledger, blockchain use cryptography to keep exchanges secure
and show transactions that everyone on the network can see.
3. AI in Auditing
Along with accounting session, artificial intelligence also apply to audit industry to
improving the quality and efficiency of the audit. The development of data analytic system
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enable the auditors to adjust better by transforming the traditional, sample based audit
approach to centralized and data driven approaches (McCabe, 2014). For example: 100%
data is tested by automated analytical algorithms instead of sample based testing. The
artificial intelligence system automatically based on the auditor's prior requirements and the
relevant knowledge stored in the system database. It divides several steps of reasoning and
judgment, and examines the accounting data and other relevant information of the audited
entity. It will automatically find out the existence of all kinds of errors, fraud, abnormal data
and changes and other business related suspicious circumstances, presented to the audit staff
by generating a list or audit opinion draft form. Artificial intelligence system enables
auditors to quickly calculate and make decisions on audit projects, maximize the production
benefits of audit services and reduce audit risk. The other development is the present of cloud
based software platforms. It helps data to be stored and shared in the cloud, which also
requires the cyber security capability in the audits. In the future, artificial intelligence will
improve significantly in audit industry. For example: IBM Watson computer system are able
to read, listen, learn and process billions of documents per minute. It means, this system can
work with all the accounting standards, Generally Accepted Accounting Principles (US
GAAP) or International financial Reporting Standards (IFRS), etc and generate the reports.
This technology is still not developed, however there is clearly change upcoming.
4. Challenge of Vietnam accounting and auditing market in the fourth industrial
revolution
According to experts in the field of accounting and auditing, the Industrial Revolution
4.0 is accompanied by the vigorous development of information technology and artificial
intelligence, so auditor audiences also become more complicated. This requires the audit
company and the auditors to renew and upgrade themselves to meet new requirements in the
performance of their duties. In Vietnam, the State Audit mainly audits on papers, however,
the Industrial Revolution 4.0 will make the paper documents are no longer available. Auditors
receive more information digitally nowadays, through PDF’s for instance, which facilitates
their working methods. By using digital working methods and not paper files, they gain
advantages such as flexibility and efficiency. They no longer have to carry multiple binders
with them, only the computer and possibly scanners and extra computer screens. This allows
a freedom to be able to work outside of the office without having to make sure they have all
of the binders with them, which makes it easier for the auditors. The good news is that in the
Law on Accounting 2015 of the National Assembly and the Government's Decree No.
174/2016 / ND-CP dated 30/12/2016 detailing a number of articles of the Law on Accounting
has related provisions about Accounting documents stored on electronic media (electronic
documents, electronic invoices ...). This is also the basic requirement for accounting and
auditing during the Industrial Revolution 4.0.
However, risk of information, data loss through the Internet connection is also an
important issue that management agencies and businesses need to pay attention. Information
and audit results may be leaked from emails sending to the audited entities or outside
organizations and individuals exchanged via the shared network. Hackers can take advantage
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of informal, unofficial auditing results to carry out destructive or pervasive purposes, which
can adversely affect badly the image of audit company. At the same time, the quality of IT
infrastructure across the accounting and auditing industry generally does not meet the
requirements, especially on network security.
Beside the tools changed, working methods also are being changed into a digital
method of work. More digital communication on for instance email rather than actual
meetings can affect the relationship between the auditor and the client. As a result, it can be
perceived that the relationship becomes even more important and relevant to maintain than
before due to the paperless working methods
5. Suggestion and conclusion
The Industrial Revolution 4.0 requires government to better prepare their IT
infrastructure to keep up with the technology. Accountants and auditors must also improve
their IT skills to meet the requirements of the jobs. In the field of auditing, auditing activities
in general and the State Audit of Vietnam in particular perform the function of checking,
assessing and certifying the reliability of economic and financial information processed by
accountants. As a result, changes in procedures, procedures for handling and analyzing
information as well as the presenting information in the financial report in the context of the
Industrial Revolution 4.0 also require the State Audit to innovate the audit process as well
as the use of audit methods.
Secondly, effective and appropriate methods of auditing should be studied and
applied in the context of the impact of the Industrial Revolution 4.0. Specifically, methods
of collecting, evaluating audit evidence, technical analysis methods in the context of
accounting profession using electronic voucher, blockchain technology, cloud computing
should be developed.
Thirdly, business ensure safety in the management of network security. The Industrial
Revolution 4.0 has pushed up the level of information sharing, thus creating a huge need for
cybersecurity. The accounting and auditing authorities should pay special attention to
building a data center; upgrade high and multi layer security system, ensure the expansion
of the scope of activities is stable and safe.
The competition for high quality human resources in the accounting and auditing
sector will be more drastic because at that time the demand for human resources is not only
about comprehensive knowledge but also the level of using technology at a very high level.
Auditing companies will have difficulties retaining the key employees who have been
trained, experienced, especially those who have international certificates, well meet the
requirements of large organizations and groups inside and outside due to competition from
other countries.
Requirements from the integration and the Industrial Revolution 4.0 require that the
programs, content and methods of training bachelor's degree in accounting and auditing at
the universities must have an innovation. Training institutions should study and analyze the
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characteristics of this revolution to propose and recommend innovations in all aspects. It is
necessary to continue to improve the quality of the curriculum with the knowledge that is
associated with the development trend of the Industrial Revolution 4.0.
Universities need to apply virtual accounting and audit model to simulate and practice
skills for students. When software, electronic vouchers, electronic signatures, calculations
have been programmed and automated, the traditional accounting and auditing teaching
methods according will be abandoned.
6. Reference:
Razi, M. and Madani, H. “An analysis of attributes that impact adoption of audit
software: an empirical study in Saudi Arabia”, International Journal of Accounting &
Information Management, vol 21 (2013) 170-188.
A Salary Guide Foresees a Cheery Future for Accounting and Finance Professionals.
(2014). Accounting & Financial Women’s Alliance.
Amin, H. and Mohamed, E. “Auditors’ perceptions of the impact of continuous
auditing on the quality of Internet reported financial information in Egypt”, Managerial
Auditing Journal. 31 (2016) 111-132.
McCabe, S. (2014). CPA.com study gauges firms’ preparedness for the future.
Accounting Tomorrow.
gauges firms-readiness-for-thefuture-73011-1.html
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