Blockchain is a distributed ledger technology poised to transform the accounting practice. In this paper, we provide an initial examination of the technology itself and discuss the associated opportunities and limitations. We also present an overview of the current blockchain-related practices in large accounting firms and trace significant milestones in this technology's emergence. Finally, we discuss some potential areas that future research could address.

This paper provides an overview of the emergence of artificial intelligence in accounting and auditing. We discuss the current capabilities of cognitive technologies and the implications these technologies will have on human auditors and the audit process itself. We also provide industry examples of artificial intelligence implementation by Big 4 accounting firms. Finally, we address some potential biases associated with the creation and use of artificial intelligence and discuss implications for future research.

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SUMMARY: On August 16, 2011, the Public Company Accounting Oversight Board (PCAOB) issued a concept release seeking comments on ways to enhance auditor independence. The Board notes that higher failure rates in new audit engagements might be linked to unrealistic pricing. The Board's concern is that a new auditor might be more susceptible to management pressure if initial-year audit fees are set artificially low. Prior to the Sarbanes-Oxley Act (SOX) of 2002, empirical evidence shows that auditors discounted their initial-year audit fees. This practice, known as lowballing, was expected to decrease significantly after the enactment of SOX. Indeed, findings in Huang, Raghunandan, and Rama (2009) seem to confirm that Big 4 auditors charged a fee premium on new auditor-client relationships in 2006. However, it is not clear if more recent post-SOX initial-year audits are free of lowballing. We investigate whether lowballing exists in new auditor-client relationships in an “extended” post-SOX environment for the years 2007 to 2010. Our results suggest that both Big 4 and non-Big 4 accounting firms discounted their initial-year audit fees during our sample period (2007–2010). These findings should be of interest to the PCAOB as it searches for ways to bolster auditor independence. Data Availability: Available from public sources.

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