Please use this identifier to cite or link to this item: http://hdl.handle.net/10125/64408

Autoencoder Neural Networks versus External Auditors: Detecting Unusual Journal Entries in Financial Statement Audits

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Title:Autoencoder Neural Networks versus External Auditors: Detecting Unusual Journal Entries in Financial Statement Audits
Authors:Schultz, Martin
Tropmann-Frick, Marina
Keywords:Data Analytics, Control Systems, Business Risks
accounting information systems
auditing
autoencoder neural networks
journal entry testing
Date Issued:07 Jan 2020
Abstract: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.
Pages/Duration:10 pages
URI:http://hdl.handle.net/10125/64408
ISBN:978-0-9981331-3-3
DOI:10.24251/HICSS.2020.666
Rights:Attribution-NonCommercial-NoDerivatives 4.0 International
https://creativecommons.org/licenses/by-nc-nd/4.0/
Appears in Collections: Data Analytics, Control Systems, Business Risks


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