The impact of artificial intelligence on the quality of Financial Reports and its Reflection on Decision Makers

Master thesis submitted to

Board of the College of Administration and Economics, University of Karbala, which is part of the requirements for obtaining a master’s degree in accounting sciences

from the student

Aliaa Mahdi Ali

Supervised byProf. Dr. Hussein Omran Al-Rifai

Abstract:

The research aims to use artificial intelligence techniques as a pivotal technology to improve the quality of financial reports, because these technologies have the ability to process and analyze data quickly and accurately. They also have the ability to classify financial data and detect unusual patterns, thus identifying potential risks. It also contributes to verifying financial data on an ongoing basis. Accurate monitoring of financial operations reduces the possibility of fraud and forgery, as well as high predictive ability. This, in turn, increases confidence among decision makers due to the provision of financial reports supported by analyzes of artificial intelligence techniques and reflects transparency in dealing with financial data.

The problem of the research was that there were a number of reasons that led to weak trust and credibility in financial reports, as a number of financial scandals raised a series of doubts about the reliability of financial reports, such as Enron Scandal in 2001, WorldCom, Health South, and Freddie Mac in 2003, and American Insurance Group in 2005, and Toshiba in 2015, where it was noted that most of the executive directors of companies that failed had participated in manipulating accounting numbers through fictitious transactions, and the Covid-19 pandemic crisis also had its repercussions on the economic situation in companies resorting to using earnings management. During the duration of the epidemic for the purpose of mitigating the level of reported losses to restore the confidence of investors and stakeholders.

As a result of reaching the digital age and the Fourth Industrial Revolution and the development of digital technology characterized by it, represented by artificial intelligence techniques, huge data analysis, and the Internet of Things, these technologies must be adopted and employed to enhance confidence in financial reports.

Therefore, the study included both a theoretical aspect and an applied aspect. This study relied on the descriptive and analytical approach. To test the study hypotheses, the research tool, the questionnaire, was used. It was distributed to a sample of accountants and auditors at the basic level, as well as a number of programmers. 121 responses were obtained, and the statistical program Smart- Pls was used..

Accordingly, the study concluded that there is a positive impact of artificial intelligence represented by its techniques (machine learning, deep learning, neural network, expert systems, Internet of Things) on the quality of financial reports and decision makers.

Keywords: Artificial intelligence, Quality of financial reports, Decision makers

The impact of artificial intelligence on the quality of Financial Reports and its Reflection on Decision Makers

Master thesis submitted to

Board of the College of Administration and Economics, University of Karbala, which is part of the requirements for obtaining a master’s degree in accounting sciences

from the student

Aliaa Mahdi Ali

Supervised by

Prof. Dr. Hussein Omran Al-Rifai

Abstract:

The research aims to use artificial intelligence techniques as a pivotal technology to improve the quality of financial reports, because these technologies have the ability to process and analyze data quickly and accurately. They also have the ability to classify financial data and detect unusual patterns, thus identifying potential risks. It also contributes to verifying financial data on an ongoing basis. Accurate monitoring of financial operations reduces the possibility of fraud and forgery, as well as high predictive ability. This, in turn, increases confidence among decision makers due to the provision of financial reports supported by analyzes of artificial intelligence techniques and reflects transparency in dealing with financial data.

The problem of the research was that there were a number of reasons that led to weak trust and credibility in financial reports, as a number of financial scandals raised a series of doubts about the reliability of financial reports, such as Enron Scandal in 2001, WorldCom, Health South, and Freddie Mac in 2003, and American Insurance Group in 2005, and Toshiba in 2015, where it was noted that most of the executive directors of companies that failed had participated in manipulating accounting numbers through fictitious transactions, and the Covid-19 pandemic crisis also had its repercussions on the economic situation in companies resorting to using earnings management. During the duration of the epidemic for the purpose of mitigating the level of reported losses to restore the confidence of investors and stakeholders.

As a result of reaching the digital age and the Fourth Industrial Revolution and the development of digital technology characterized by it, represented by artificial intelligence techniques, huge data analysis, and the Internet of Things, these technologies must be adopted and employed to enhance confidence in financial reports.

Therefore, the study included both a theoretical aspect and an applied aspect. This study relied on the descriptive and analytical approach. To test the study hypotheses, the research tool, the questionnaire, was used. It was distributed to a sample of accountants and auditors at the basic level, as well as a number of programmers. 121 responses were obtained, and the statistical program Smart- Pls was used..

Accordingly, the study concluded that there is a positive impact of artificial intelligence represented by its techniques (machine learning, deep learning, neural network, expert systems, Internet of Things) on the quality of financial reports and decision makers.

Keywords: Artificial intelligence, Quality of financial reports, Decision makers