Artificial Neural Networks in Auditing: State of the Art

Very many things in our business and auditing environment are changing at an increasing rate. One central theme in auditing is how information technology developments affect the nature of the audit process and the audit skills. Auditors have to ask how to operate in new environments. New information technology support systems for monitoring and controlling operations could be useful. Artificial neural network (ANN) based information systems are proposed as one possible solution as a support tool for auditors. This article introduces the ANN technology and reviews the literature on auditing ANN applications. The review showed that the main application areas in auditing were material errors, management fraud, and support for going concern decision. ANNs have also been applied to internal control risk assessment, audit fee, and financial distress problems. In addition the paper summarises modeling issues of the ANN applications pertaining to auditing problems. Finally, the paper outlines possible tasks were ANN based support systems could be used within auditing.