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on Accounting and Auditing |
| By: | Jesus Feliciano, Cristiano |
| Abstract: | The statutory audit enhances the credibility of financial reporting by expressing an opinion on whether a company’s financial statements present a true and fair view in accordance with generally accepted accounting principles. This role can only be fulfilled if audits are performed to a high professional standard, fostering trust, protecting investors, and lowering companies’ cost of capital. Yet, intense competition in the audit market has driven down fees and put pressure on audit quality. To reconcile the need for reliable assurance with cost efficiency, effective and innovative audit methodologies are essential. The adoption of emerging technologies could help sustain this balance. From cloud computing and artificial intelligence (AI) to drone utilization, digital solutions are progressing rapidly. Advanced information technology (IT) can optimize audit procedures by enabling the handling of big data and streamlining control routines. Additionally, adopting such innovations could reduce the need for staff and help address the shortage of audit professionals. However, it is unclear which of the growing number of automated tools and techniques (ATT) will prove relevant in the medium term and demand specialized expertise. Data-driven methodologies often require proficiency in complex (statistical) techniques, posing a challenge to the technical capabilities of audit practitioners. Moreover, the actual application of these technologies remains opaque to external stakeholders. Consequently, while IT-supported procedures may enhance audit quality, they must also be perceived as such by capital market participants. Against this backdrop, my dissertation investigates a set of innovative technologies in auditing. It assesses their future relevance through comparative analysis and evaluates the current level of IT skills among practitioners. This allows for the identification of knowledge gaps, whose closure could improve audit quality and inform future research and practice. Furthermore, I explore how selected technologies influence the perceived audit quality among users of financial statements, acknowledging the audit as a credence good. The findings are presented cumulatively across three empirical studies. The first research project (Paper 1) is based on a survey of 433 external auditors and investigates two aspects: first, which emerging technologies participants believe will be crucial in the medium term, and second, how they assess their current IT skills in utilizing these tools. By comparing both indicators, my study identifies significant gaps between the actual level of expertise and the anticipated relevance of these innovations. The analysis covers 18 technologies, 14 of which are regarded as highly important by the audit profession. However, current IT knowledge is largely insufficient, raising questions about professional development. The smallest gap is observed in online meeting solutions, while the largest deficits appear for prominently discussed technologies like machine learning (ML) and robotic process automation. The IT gaps are notably more pronounced among female and older subjects, whereas a higher level of education correlates with a smaller deficit. Given that the effectiveness and efficiency of external audits also depend on the control processes of the internal audit function, which evolves at its own pace, the second research project (Paper 2) surveys 143 internal auditors to capture their views on the future relevance of emerging technologies and their current expertise. The study analyzes 19 innovations. Respondents rate 15 tools as potentially important, but their self-assessed IT skills are consistently lower. The smallest gaps appear in communication technologies (online meeting solutions and collaboration platforms), which have become well-established since the COVID-19 pandemic. The most substantial gaps concern AI-based applications, particularly ML and natural language processing. Larger deficits are observed among female participants, reinforcing the gender-related disparities noted in the first study and underscoring the need for targeted adult education initiatives. The third research project (Paper 3) is a web-based experiment conducted with 108 financial analysts. It applies a 2×2+1 between-subjects design to explore the impact of audit methodology disclosure (compared to a control group), as well as the influence of advanced IT and shared service centers (SSCs), which increasingly perform IT-enabled audit tasks. Respondents were asked to assess the likelihood of granting credit to a fictitious company, investing in its shares, either professionally or privately, and recommending the shares to third parties. Disclosing audit methodology positively affects their lending and investment decisions. No significant effects emerge for advanced IT or SSCs overall. However, experienced analysts respond more positively to digital innovations when audit procedures are not delegated to SSCs, while information on shared services tends to prompt greater caution. These interaction effects do not appear among novices. The study suggests that advanced technologies are not inherently linked to higher perceived audit quality; rather, their impact depends on who uses the innovation. Taken together, the three studies offer robust empirical insights into the digital transformation of the audit industry and highlight specific areas for regulatory, organizational, academic, and educational intervention to safeguard audit quality and reinforce market confidence. |
| Date: | 2026–01–29 |
| URL: | https://d.repec.org/n?u=RePEc:dar:wpaper:160656 |
| By: | Klas Klaas; Pilar Sáenz De Ormijana |
| Abstract: | Public internal financial control (PIFC) was introduced by the European Commission to help public sector organisations align their financial management and control systems with the principles of sound financial management. This paper reviews the state of internal control and internal audit in EU candidate countries and potential candidates, identifying achievements, challenges and options for further development. While the core elements of PIFC have supported convergence with EU good practices and international standards, implementation often remains focused on compliance rather than results. The paper proposes measures to strengthen internal control and enhance the effectiveness of internal audit. |
| Keywords: | central harmonisation units, CHUs, EU accession, financial management and control, internal audit, internal control, managerial accountability, OCDE, OECD, PIFC, public administration reform, public financial management, Public internal financial control, risk management, SIGMA |
| Date: | 2026–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:oec:govaac:81-en |
| By: | Pettenuzzo, Davide; Sabbatucci, Riccardo; Timmermann, Allan |
| Abstract: | What do companies' 10-Q filings reveal about the state of the macro economy and do specific accounting variables contain particularly relevant information? To address these questions, we analyze the lead-lag patterns of more than twenty accounting variables in relation to aggregate economic activity. We develop new daily corporate account business activity indices that aggregate firm-level accounting information while controlling for shifts in the composition of announcers and reducing firm-specific noise. Our new indices show that firm liquidity becomes significantly lower while corporate debt grows significantly faster several months prior to recessions, and thus can be used as leading indicators. Conversely, operations, earnings and profitability measures tend to be significantly lower after recessions, suggesting they are mostly lagging, pro-cyclical indicators of economic activity. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19497 |
| By: | Lakshminarayan, Srivatsan |
| Abstract: | Framework-based teaching is widely recommended as a way to develop the judgement that applying International Financial Reporting Standards (IFRS) requires. In practice, it is often realised in a thin, 'referential' form: the conceptual framework is named or reproduced alongside a standard without being made to do explanatory work. This paper proposes a contextual extension. Established framework-based teaching moves from the framework to a requirement and then to the judgement a preparer makes in applying it. This paper adds a further object: the judgement the standard-setter made in writing the requirement, recorded in the documents that accompany a standard — particularly the Basis for Conclusions — and in the wider due process. Brought into teaching, that reasoning lets conceptual ideas interact with the economics of a transaction and the requirements of a specific standard. Standard-setter choices are treated as 'prior' judgements: contingent, negotiated and revisable. The paper develops a transferable critical overlay — what alternative was foregone, what is left silent, what precedent may be set — and two classroom sequences for deploying it. Intended for a final-year undergraduate or comparable postgraduate financial reporting module, it is demonstrated on revenue recognition (IFRS 15) with a short, worked appendix. The contribution is conceptual and pedagogical rather than empirical: a design for teaching, with a candid account of its costs and limits. |
| Date: | 2026–07–04 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:g9qps_v1 |
| By: | Qi Wang |
| Abstract: | Corporate annual reports contain weakly structured evidence about foreign-exchange risk management, derivative use, natural hedging, and explicit non-use. This study develops AWARE-FX, an auditable AI/NLP decision-support system that converts report text into traceable firm-year hedging-disclosure measures. The system combines a professional-source lexicon, negation and accounting-status logic, channel-specific financial encoders, exact evidence gates, conservative aggregation, and an audit ledger. Across 24, 909 Hong Kong firm-years from 2008-2025, it retrieves and scores 543, 527 snippets. Reliability is evaluated through ablations, a stratified 300-snippet human audit, three-seed FinBERT-ModernBERT comparisons, strict 2023-2025 temporal tests, probability calibration, selective prediction, and fixed-prompt generative-model benchmarks. FinBERT has the higher mean F1 in seven of eight encoder task-split comparisons; its temporal F1 ranges from 0.702 to 0.872. Abstaining on the 20% least-confident temporal observations raises retained-sample F1 by 0.050-0.077. Deterministic Qwen3-8B performs strongly on commodity and negation evidence but poorly on foreign-debt and accounting-context labels, showing that a general-purpose LLM does not uniformly replace domain constraints. The strict FX score is negatively associated with linked baseline and stress-period FX exposure, whereas the generic broad score is not. These associations provide external construct validation, not causal estimates of hedging effectiveness. AWARE-FX contributes a tested decision-support architecture in which retrieval, status logic, classification, uncertainty handling, aggregation, and external validation remain separately auditable. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.27611 |
| By: | Hamza Ousi Moh (USMBA - Université Sidi Mohamed Ben Abdellah); Tarik Jellouli (USMBA - Université Sidi Mohamed Ben Abdellah) |
| Abstract: | In a Moroccan economic environment characterized by growing competition and increasingly complex regulations, companies are compelled to strengthen their internal organization. This article examines how the implementation of an organizational procedures manual serves as a structuring lever for internal control systems. Through an in-depth case study conducted within a joint-stock company (SA) operating in the industrial flour milling sector in the Fès-Meknès region, carried out in collaboration with a certified public accounting firm, we present the methodological approach for developing the manual and empirically analyze its organizational effects. Results supported by interview verbatim excerpts, measurable improvement indicators, and a review of existing literature demonstrate that the formalization of procedures promotes the segregation of duties, the establishment of permanent controls, and an improvement in organizational governance. This article contributes an analysis of the causal mechanisms linking formalization and internal control in the specific context of Moroccan industrial companies, a context that remains underrepresented in the French-language academic literature. |
| Abstract: | Dans un contexte économique marocain marqué par une concurrence accrue et une complexification des réglementations, les entreprises sont contraintes de renforcer leur organisation interne. Cet article examine comment la mise en place d'un manuel de procédures organisationnelles peut constituer un levier essentiel au renforcement du système de contrôle interne. À travers une étude de cas conduite au sein d'une société anonyme du secteur de la minoterie industrielle, implantée dans la région Fès-Meknès, et réalisée en collaboration avec un cabinet d'expertise comptable partenaire, nous présentons la démarche méthodologique d'élaboration du manuel et analysons empiriquement ses effets organisationnels. Les résultats, étayés par des verbatims d'entretiens, des indicateurs d'amélioration mesurables et une mise en perspective avec la littérature existante, montrent que la formalisation des procédures favorise la séparation des fonctions, la matérialisation des contrôles permanents et l'amélioration de la gouvernance. La contribution de cet article réside dans une analyse des mécanismes causaux liant formalisation et contrôle interne dans le contexte spécifique des entreprises industrielles marocaines, contexte qui demeure sous-représenté dans la littérature académique francophone. |
| Keywords: | COSO, Manuel de procédures, Séparation des fonctions, Gouvernance d'entreprise, Minoterie, Internal control, procedures manual, Segregation of duties, Corporate governance, Flour milling, Contrôle interne |
| Date: | 2026–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05654358 |