Data Analytics, Control Systems, Business Risks

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    Autoencoder Neural Networks versus External Auditors: Detecting Unusual Journal Entries in Financial Statement Audits
    ( 2020-01-07) Schultz, Martin ; Tropmann-Frick, Marina
    With the increasing complexity of business processes in today's organizations and the ever-growing amount of structured accounting data, identifying erroneous or fraudulent business transactions and corresponding journal entries poses a major challenge for public accountants at annual audits. In current audit practice, mainly static rules are applied which check only a few attributes of a journal entry for suspicious values. Encouraged by numerous successful adoptions of deep learning in various domains we suggest an approach for applying autoencoder neural networks to detect unusual journal entries within individual financial accounts. The identified journal entries are compared to a list of entries that were manually tagged by two experienced auditors. The comparison shows high f-scores and high recall for all analyzed financial accounts. Additionally, the autoencoder identifies anomalous journal entries that have been overlooked by the auditors. The results underpin the applicability and usefulness of deep learning techniques in financial statement audits.
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    Unstructured Data for Cybersecurity and Internal Control
    ( 2020-01-07) Canelón, Jesús ; Huerta, Esperanza ; Leal, Norma ; Ryan, Terry
    This paper proposes a research framework for studying the connections--realized and potential--between unstructured data and cybersecurity and internal controls. In the framework, cybersecurity and internal control goals determine the tasks to be conducted. The task influences the types of unstructured data to be accessed and the types of analysis to be done, which in turn influences the outcomes that can be achieved. Patterns in unstructured data are relevant for cybersecurity and internal control, but unstructured data poses unique challenges for its analysis and management. This paper discusses some of these challenges including veracity, structuralizing, bias, and explainability.
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