Robots searching financial statements for fraud -- sounds like a Stanley Kubrick movie, doesn't it? But with audit fees rising, chief executive officers taking more responsibility for financial statements, and companies revealing billion-dollar revisions, the need for such "auditbots" is becoming essential.
Professor Robert Jensen, who teaches information systems at Trinity University in San Antonio says there are "more than enough incentives" for accounting firms and companies to create automated auditing aids using current technology.
"Software that permits database systems to talk to each other currently flows between companies, and auditbots can make it difficult if not impossible for companies to alter or eliminate key financial data," Jensen said.
He envisions cyber tags, like the ones that department stores remove from clothing after payment, being attached to individual transactions that cannot be removed and which automatically spot attempts to cook the books.
Auditbots would have spelled out the US$7.1 billion in accounting irregularities of WorldCom Inc long before they were revealed during the past two months, Jensen said.
The second-largest long-distance company admitted it improperly capitalized this huge amount, which it should have immediately deducted in its annual reports of 2000, last year and the first quarter of this year.
"The software would have attached a tag to each transaction involving costs that would have forced its reporting systems to spell them out in proper fashion rather than hide them," the professor said.
What would it take to create and enforce a system of auditbots? Jensen believes that in the next five to 10 years the business world and accounting firms will be forced to develop much better automated systems for auditing. "And these systems could be mandated by Congress and accounting regulators as they become aware of these systems," he said.
Miklos Vasarhelyi, professor of accounting information systems at Rutgers University in Newark, New Jersey, said auditbots are already being used with corporate foreign currency transfers, for on-line securities trading on Wall Street, and by AT&T Corp for fraud detection in its billing systems.
"Worldwide and industrywide use could be just around the corner," said Vasarhelyi, a leader in development of continuous auditing for business and the accounting profession.
Douglas Carmichael, an accounting professor at City University of New York's Baruch College and former head of auditing for the American Institute of CPAs, says that while such auditbots wouldn't be failsafe, they might reduce the huge expense for forensic accounting work, which can reach 10,000 hours, by as much as 25 percent.
SEEKING CLARITY: Washington should not adopt measures that create uncertainties for ‘existing semiconductor investments,’ TSMC said referring to its US$165 billion in the US Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) told the US that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona. “New import restrictions could jeopardize current US leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the US, including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the US Department of Commerce. TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by US President Donald Trump’s
The government has launched a three-pronged strategy to attract local and international talent, aiming to position Taiwan as a new global hub following Nvidia Corp’s announcement that it has chosen Taipei as the site of its Taiwan headquarters. Nvidia cofounder and CEO Jensen Huang (黃仁勳) on Monday last week announced during his keynote speech at the Computex trade show in Taipei that the Nvidia Constellation, the company’s planned Taiwan headquarters, would be located in the Beitou-Shilin Technology Park (北投士林科技園區) in Taipei. Huang’s decision to establish a base in Taiwan is “primarily due to Taiwan’s talent pool and its strength in the semiconductor
Industrial production expanded 22.31 percent annually last month to 107.51, as increases in demand for high-performance computing (HPC) and artificial intelligence (AI) applications drove demand for locally-made chips and components. The manufacturing production index climbed 23.68 percent year-on-year to 108.37, marking the 14th consecutive month of increase, the Ministry of Economic Affairs said. In the first four months of this year, industrial and manufacturing production indices expanded 14.31 percent and 15.22 percent year-on-year, ministry data showed. The growth momentum is to extend into this month, with the manufacturing production index expected to rise between 11 percent and 15.1 percent annually, Department of Statistics
An earnings report from semiconductor giant and artificial intelligence (AI) bellwether Nvidia Corp takes center stage for Wall Street this week, as stocks hit a speed bump of worries over US federal deficits driving up Treasury yields. US equities pulled back last week after a torrid rally, as investors turned their attention to tax and spending legislation poised to swell the US government’s US$36 trillion in debt. Long-dated US Treasury yields rose amid the fiscal worries, with the 30-year yield topping 5 percent and hitting its highest level since late 2023. Stocks were dealt another blow on Friday when US President Donald
RSS