An Investigation of the Current Applications of Expert Systems in Internal Auditing

Date of Submission

1989

Document Type

Thesis

Degree Name

Master of Science in Accounting

Department

Accounting

Advisor

Michael Rolleri

LCSH

Auditing,Internal, Information storage and retrieval systems--Accounting, Expert systems (Computer science)

Call No. at the Univ. of New Haven Library

AS 36 .N29 Acc. 1989 no.1

Abstract

The internal auditor's tools entail both substantial financial commitment and personnel commitment during initial implementation, but the benefits-savings in cost and time and more accurate, thorough audit results— can pay off many times over.

In the past, auditors have enthusiastically adapted new computer-based tools to improve job performance. Expert systems promise to become one of these tools that enhance the ability of internal auditors to do their jobs more efficiently.

Expert systems are intelligent computer applications that use data, a knowledge base, and inference techniques to solve problems that formerly required human expertise. In recent years, these systems have reached a level of performance comparable to that of human experts in specialized problem areas. They have been developed for such varied applications as medicine and geology. This has led to the suggestion that expert systems should be developed for managers who make manufacturing, marketing, financial, and personnel decisions.

During the last few years, expert systems have been proliferating in many different accounting areas, the least of which is the auditing profession. Although their use in auditing is just beginning, expert systems are being developed in the internal auditing area. Internal auditing expert systems apply to very specific problems, such as evaluating internal controls, aiding internal EDP auditors, analyzing a firm's allowance for bad debts, and training new internal audit staff members. This study describes expert systems, discusses their operating mechanisms, and examines the benefits, risks and costs of using them in internal auditing profession.

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