02 Accounting Information Systems (Including Topics about Technology in Accounting)

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    The use of information technology for international transfer pricing in multinational enterprises
    ( 2020-08-15) Hemling, Lars ; Rossing, J. Christian Plesner ; Hoffjan, Andreas
    This paper studies the degree to which multinational enterprises (MNEs) use information technology (IT) for automating international transfer pricing (ITP). Based on 21 interviews conducted with in-house accounting and tax professionals in MNEs, we find a limited use of IT for automating transfer price setting as well as documenting compliance with the arm's length principle. That said, some degree of automation is observed in regards to the intra-organizational workflow management of producing documentation files. The overall low level of IT automation observed is grounded in both system-level arguments, e.g. fragmented accounting information system (AIS) environments, as well as in-house functional hierarchies. Specifically, management accountants and IT functions are found to dominate the AIS design agenda, while the tax function's goals of transfer pricing tax compliance plays a relatively marginal role. We argue that while MNE tax functions have gained increasing attention among MNE top executives in the wake of BEPS, management accountants and IT experts continue to play a superior role in the design of internal accounting and reporting systems. Ultimately, this limits the tax function's ability to fully automate the transfer pricing process, partially because the accounting and system configurations prioritized by management accountants and IT staff often conflict with those system designs preferred for managing transfer pricing tax risks.
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    Is sophistication always better? The impact of data analytic tool sophistication and supervisor preferences on the evaluation of complex estimates
    ( 2020-08-14) Koreff, Jared ; Perreault, Steve
    The rise of technology-enabled data analytic tools creates opportunities for firms to improve audit quality related to complex estimates. In an effort to combat auditors' resistance to using technology-enabled tools, firms may promote the sophistication of such tools to their audit staff. However, there is a paucity of research that has examined how auditors consider the sophistication of an analytic tool when making judgments about audit evidence. We conduct an experiment and find that, holding all other information constant, the perceived sophistication of an analytic tool interacts with the preferences of an audit supervisor to jointly impact auditors' anticipated evaluation from a supervisor and, in turn, their evidence evaluation decisions when auditing a complex estimate. As such, the promotion of tool sophistication by audit firms can significantly affect the audit of complex estimates to a greater degree than what would normatively be expected. Implications for audit theory and practice are discussed.
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    Critical issues of the audit expectation gap in the era of audit digitalisation
    ( 2020-08-13) Fotoh, Lazarus Elad ; Lorentzon, Johan Ingemar
    This study aims to conceptually examine how a paradigm shift from traditional audits to digital audits could impact critical and recurring issues of the expectation gap. The findings indicate that digital platforms such as data analytics systems supported by machine learning can facilitate the identification of anomalies in data which can be investigated manually by auditors. Also, big data can be used in the audit process to interrogate an entire population of journal entries, transactions, and unstructured data, enabling auditors to focus on transactions displaying unusual patterns identified through artificial intelligence. Furthermore, drones could equally facilitate stock counts, compliance, and the attainment of operational objectives. In a nutshell, existing extant literature and commentaries underscore the significance of these digital technologies in enhancing internal controls and facilitating fraud prevention and detection. This study further contributes to the extant literature by projecting new avenues where the expectation gap is likely to emerge due to a paradigm shift from traditional audits to digital audits, enabling the auditing profession to take pre-emptive measures to prevent the exacerbation of an already worsening trust and confidence in the audit profession by financial statement users.