Manual journal entry testing: Data analytics and the risk of fraud

Fay, Rebecca; Negangard, Eric M.

doi:10.1016/j.jaccedu.2016.12.004

Cited by 31 publications

(13 citation statements)

References 6 publications

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“…Applying Benford’s Law in auditing the financial statements of a company from the medical industry, Asllani and Naco [ 51 ] construct a useful methodology to be used by auditors in identifying the categories of assets, liabilities, revenue and expenses which present a high risk of fraud in accounting. In their recent article, Fay and Negangard [ 52 ] present a procedure of analysis regarding the manual journal entries that could be used in the audit of financial statements to identify the potential red flags of fraud using Benford’s Law. Intensifying the use of Benford’s Law to some population of transactional data, Nigrini and Miller [ 53 ] provide a new second-order test for differences between the ordered transactions.…”

Section: Literature Reviewmentioning

confidence: 99%

Reliability of Financial Information from the Perspective of Benford’s Law

Jianu

2021

Entropy

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This study investigates the conformity to Benford’s Law of the information disclosed in financial statements. Using the first digit test of Benford’s Law, the study analyses the reliability of financial information provided by listed companies on an emerging capital market before and after the implementation of International Financial Reporting Standards (IFRS). The results of the study confirm the increase of reliability on the information disclosed in the financial statements after IFRS implementation. The study contributes to the existing literature by bringing new insights into the types of financial information that do not comply with Benford’s Law such as the amounts determined by estimates or by applying professional judgment.

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Section: Literature Reviewmentioning

confidence: 99%

Reliability of Financial Information from the Perspective of Benford’s Law

Jianu

2021

Entropy

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“…The second stream of research focusses on additional competences that are necessary to ensure an effective process when using BDA (Dubey and Gunasekaran, 2015). The latest research by McKinney et al (2017); Enget et al (2017); Janvrin and Weidenmier Watson (2017) and Sledgianowski et al (2017) emphasises the need to incorporate issues of BD and BDA into the accounting curriculum by acknowledging that these technologies are transforming the accounting profession (Enget et al , 2017; Fay and Negangard, 2017; Brown-Liburd et al , 2015; Zhang et al , 2015).…”

Section: Literature Review and Theoretical Frameworkmentioning

confidence: 99%

Motivation to use big data and big data analytics in external auditing

Dagilienė

Klovienė

2019

MAJ

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Purpose This paper aims to explore organisational intentions to use Big Data and Big Data Analytics (BDA) in external auditing. This study conceptualises different contingent motivating factors based on prior literature and the views of auditors, business clients and regulators regarding the external auditing practices and BDA. Design/methodology/approach Using the contingency theory approach, a literature review and 21 in-depth interviews with three different types of respondents, the authors explore factors motivating the use of BDA in external auditing. Findings The study presents a few key findings regarding the use of BD and BDA in external auditing. By disclosing a comprehensive view of current practices, the authors identify two groups of motivating factors (company-related and institutional) and the circumstances in which to use BDA, which will lead to the desired outcomes of audit companies. In addition, the authors emphasise the relationship of audit companies, business clients and regulators. The research indicates a trend whereby external auditors are likely to focus on the procedures not only to satisfy regulatory requirements but also to provide more value for business clients; hence, BDA may be one of the solutions. Research limitations/implications The conclusions of this study are based on interview data collected from 21 participants. There is a limited number of large companies in Lithuania that are open to co-operation. Future studies may investigate the issues addressed in this study further by using different research sites and a broader range of data. Practical implications Current practices and outcomes of using BD and BDA by different types of respondents differ significantly. The authors wish to emphasise the need for audit companies to implement a BD-driven approach and to customise their audit strategy to gain long-term efficiency. Furthermore, the most challenging factors for using BDA emerged, namely, long-term audit agreements and the business clients’ sizes, structures and information systems. Originality/value The original contribution of this study lies in the empirical investigation of the comprehensive state-of-the-art of BDA usage and motivating factors in external auditing. Moreover, the study examines the phenomenon of BD as one of the most recent and praised developments in the external auditing context. Finally, a contingency-based theoretical framework has been proposed. In addition, the research also makes a methodological contribution by using the approach of constructivist grounded theory for the analysis of qualitative data.

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“…Educators can help develop the questioning skills of students, so they ask relevant questions in the correct areas (McKinney et al , 2017). In doing this, the students will develop their questioning skills, interrogating Big Data using data analytics, conducting tests to ensure data files are complete, validating data (Alles, 2015; Fay and Negangard, 2017) and encouraging a questioning attitude (Brown-Liburd et al , 2015).…”

Section: Resultsmentioning

confidence: 99%

“…There is an emphasis on ensuring real-world procedures and techniques (Enget et al , 2017). Learning requirements include how to interrogate Big Data using real-time data analytics tools to interrogate data, extract useful information and draw conclusions (Kokina et al , 2017; Fay and Negangard, 2017; Vasarhelyi et al , 2015; Yoon et al , 2015) while remaining informed about the inherent challenges of Big Data and data analytics (Zhang et al , 2015).…”

Section: Resultsmentioning

confidence: 99%

“Big results require big ambitions”: big data, data analytics and accounting in masters courses

McBride

Philippou

2021

ARJ

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Purpose Accounting education is re-inventing itself as technology impacts the practical aspects of accounting in the real world and education tries to keep up. Big Data and data analytics have begun to influence elements of accounting including audit, accounting preparation, forensic accounting and general accountancy consulting. The purpose of this paper is to qualitatively analyse the current skills provision in accounting Masters courses linked to data analytics compared to academic and professional expectations of the same. Design/methodology/approach The academic expectations and requirements of the profession, related to the impact of Big Data and data analytics on accounting education were reviewed and compared to the current provisions of this accounting education in the form of Masters programmes. The research uses an exploratory, qualitative approach with thematic analysis. Findings Four themes were identified of the skills required for the effective use of Big Data and data analytics. These were: questioning and scepticism; critical thinking skills; understanding and ability to analyse and communicating results. Questioning and scepticism, as well as understanding and ability to analyse, were frequently cited explicitly as elements for assessment in various forms of accounting education in the Masters courses. However, critical thinking and communication skills were less explicitly cited in these accounting education programmes. Research limitations/implications The research reviewed and compared current academic literature and the requirements of the professional accounting bodies with Masters programmes in accounting and data analytics. The research identified key themes relevant to the accounting profession that should be explicitly developed and assessed within accounting education for Big Data and data analytics at both university and professional levels. Further analysis of the in-depth curricula, as opposed to the explicitly stated topic coverage, could add to this body of research. Practical implications This paper considers the potential combined role of professional qualification examinations and master’s degrees in skills provision for future practitioners in accounting and data analysis. This can be used to identify the areas in which accounting education can be further enhanced by focus or explicit mention of skills that are both developed and assessed within these programmes. Social implications The paper considers the interaction between academic and professional practice in the areas of accounting education, highlighting skills and areas for development for students currently considering accounting education and data analytics. Originality/value While current literature focusses on integrating data analysis into existing accounting and finance curricula, this paper considers the role of professional qualification examinations with Masters degrees as skills provision for future practitioners in accounting and data analysis.

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Manual journal entry testing: Data analytics and the risk of fraud

Cited by 31 publications

References 6 publications

Reliability of Financial Information from the Perspective of Benford’s Law

Reliability of Financial Information from the Perspective of Benford’s Law

Motivation to use big data and big data analytics in external auditing

“Big results require big ambitions”: big data, data analytics and accounting in masters courses

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