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

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dc.contributor.authorSchultz, Martin
dc.contributor.authorTropmann-Frick, Marina
dc.date.accessioned2020-01-04T08:18:31Z
dc.date.available2020-01-04T08:18:31Z
dc.date.issued2020-01-07
dc.description.abstractWith 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.
dc.format.extent10 pages
dc.identifier.doi10.24251/HICSS.2020.666
dc.identifier.isbn978-0-9981331-3-3
dc.identifier.urihttp://hdl.handle.net/10125/64408
dc.language.isoeng
dc.relation.ispartofProceedings of the 53rd Hawaii International Conference on System Sciences
dc.rightsAttribution-NonCommercial-NoDerivatives 4.0 International
dc.rights.urihttps://creativecommons.org/licenses/by-nc-nd/4.0/
dc.subjectData Analytics, Control Systems, Business Risks
dc.subjectaccounting information systems
dc.subjectauditing
dc.subjectautoencoder neural networks
dc.subjectjournal entry testing
dc.titleAutoencoder Neural Networks versus External Auditors: Detecting Unusual Journal Entries in Financial Statement Audits
dc.typeConference Paper
dc.type.dcmiText

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