WORLD ACADEMY OF INFORMATICS AND MANAGEMENT SCIENCES
ISSN : 2278-1315
internal control across the organization. Emerging
Take the following example: Fraud detection — The
technologies not only present opportunities to increase
insurance industry uses machine learning to identify clusters
efficiency but also the quality of financial reporting. Audit
of fraud in historical claims and compare to new claims to
committees play a vital oversight role in helping to establish
determine if they may be fraudulent.
the right control environment for the adoption of risk
Regression: involves training a machine to estimate the next
management practices by management related to emerging
numeric value in a sequence. This type of problem solving is
technologies that impact financial reporting. In carrying out
sometimes called prediction, particularly when it is applied to
their responsibility, audit committees should be aware of the
time series data.
company’s emerging technology strategy regarding financial
Take the following example:
reporting. It also is important that the audit committee be
Forecasting — Companies forecast revenues and expenses
knowledgeable about the specific technology being
based on historical indicators that may be indicative of future
contemplated, so that it can oversee its alignment with the
patterns. The forecasts can be used for budgeting or to
company’s strategy as well as its impact on the business and
develop forward-looking statements
financial reporting.
.
In overseeing the strategy, audit committees can help
OVERSIGHT IN ACTION:
monitor:
i.
Whether internal and external resources with the
What are the objectives associated with the use of the
right expertise have been devoted to such projects;
emerging technology?
ii.
That technological performance and accurate
reporting is evaluated in a systematic way; and
Will the technology contribute to a business growth
iii.
That a commitment to integrity, ethical values, and
target, provide a competitive benefit, address an
compliance is reinforced at all levels of the
existing process risk, or reduce costs?
company, including within components of the
Does the use of the emerging technology indicate a
organization dedicated to emerging technologies.
change in the company’s business model or strategic
outlook in ways that create new financial reporting
IMPACT ON FINANCIAL REPORTING: ARTIFICIAL
risks?
INTELLIGENCE (AI)
How does the emerging technology project integrate with
The terms AI, machine learning, and deep learning are often
management’s existing digital and analytics plans?
used interchangeably, although there are distinctions among
As one example, for an AI project, is the solution
them.AI is the ability of a machine to perform cognitive
intended to work as an assisted AI (i.e., AI that
tasks that are typically associated with human minds (e.g.,
improves what the business is already doing),
problem solving, learning, perceiving, and reasoning).
augmented AI (i.e., AI that enables the business to do
things it cannot), or autonomous AI (i.e., AI that acts
Machine learning is one approach to achieve AI. As
on its own)?
humans gain more life experiences, they typically learn
Does use of the emerging technology raise tax, legal,
more and develop greater insights. Machine learning
regulatory, or financial reporting questions that require
technology enables a computer to learn from experiences in
external advice?
a similar manner. This means that computers do not have to
be continually programmed with fixed rules. As trends
What has the company done to train and maintain its
change, computers can automatically learn the changing
internal resources and technological competencies related
landscape and adjust their decision making. All AI and
to emerging technologies?
machine learning are captured in a model. Deep learning
uses more complex models that can further capture detailed
IMPACT ON FINANCIAL REPORTING:
nuances from the learning experience. While individual
ROBOTIC PROCESS AUTOMATION
building blocks for AI (e.g., data, algorithms, computing
RPA is driven by computer-coded, rules-based software
storage, processing power) have been present for a long
robots (bots) that model and automate business processes.
time, recent advances and convergence of these building
RPA follows predetermined protocols with precision,
blocks have propelled AI to reality. Typical use cases for
allowing for increased accuracy and cost efficiencies. Unlike
implementing AI involve business problems that can be
AI, RPA does not learn or make judgments.
solved by the following processes:
RPA operates in the user interface layer where it automates
Classification: involves training a machine to recognize
processes without being embedded in the ERP software. This
patterns in data and then categorize new data as belonging to
makes RPAs easier and less expensive to implement
a set of categories.
compared with other automation technologies.
Take the following example: Reconciliations —
Based on these characteristics, bots are well-suited to provide
Organizations have reconciliations between internal systems
ongoing cost savings and consistency. Another valuable
as well as with external systems. Once reconciling items are
benefit of RPA is the ability to migrate information across
resolved, a history of actions taken also is recorded. AI
systems. For example, a bot might take information from an
systems can learn patterns based on historical actions and
email, move it to a business production system, and then
recommend actions to be taken for an unreconciled item.
move it into an ERP or even a consolidation system. These
Clustering: involves training a machine to create a set of
“swivel chair” tasks historically required shared service
categories for which individual data instances have a set of
resources or other personnel to move information manually
common or similar characteristics.
across systems.
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ENDEAVOR 2019 | WAIMS ACADMIC PRESS
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