JETA Contents

• Principles of Analytic Monitoring for Continuous Assurance
  Authors: Miklos A. Vasarhelyi, Michael G. Alles and Alexander Kogan
  Pages: 1-21

  Abstract
  The advent of new enabling technologies and the surge in corporate scandals has combined to increase the supply, the demand, and the development of enabling technologies for a new system of continuous assurance and measurement. This paper positions continuous assurance (CA) as a methodology for the analytic monitoring of corporate business processes, taking advantage of the automation and integration of business processes brought about by information technologies. Continuous analytic monitoring-based assurance will change the objectives, timing, processes, tools, and outcomes of the assurance process.

  The objectives of assurance will expand to encompass a wide set of qualitative and quantitative management reports. The nature of this assurance will be closer to supervisory activities and will involve intensive interchange with more of the firm's stakeholders than just its shareholders. The timing of the audit process will be very close to the event, automated, and will conform to the natural life cycle of the underlying business processes. The processes of assurance will change dramatically to being meta-supervisory in nature, intrusive with the potential of process interruption, and focusing on very different forms of evidential matter than the traditional audit. The tools of the audit will expand considerably with the emergence of major forms of new auditing methods relying heavily on an integrated set of automated information technology (IT) and analytical tools. These will include automatic confirmations (confirmatory extranets), control tags (transparent tagging) tools, continuity equations, and time-series cross-sectional analytics. Finally, the outcomes of the continuous assurance process will entail an expanded set of assurances, evergreen opinions, some future assurances, some improvement on control processes (through incorporating CA tests), and some improved data integrity.

  Link to the full text of this article here.

• On the Structure of Financial Accounting Standards to Support Digital Representation, Storage, and Retrieval
  Author: Ingrid E. Fisher
  Pages: 23-40

  Abstract
  This paper provides a first look at structuring financial accounting standards to support information retrieval where document content is subject to frequent changes. The continual amendment of financial accounting standards results in the distribution of the specification of many accounting rules across multiple documents. Digital representation of financial accounting standards is suggested as an effective means toward improving the access to the standards. XML document type definitions (DTDs) are used to specify the grammar for the structure as well as the content of the financial accounting standards. The design of the DTDs reveals significant deficiencies in the current structure of financial accounting standards that preclude automation of retrieval schemes that incorporate temporal reconstruction. The deficiencies also include the lack of a hierarchical structure and a both consistent and sound arrangement. Suggestions are made for changing the structure and content of financial accounting standards to facilitate the application of digital techniques as well as enhance their understandability. A program for future research focused on the design, meaning, and use of financial accounting standards is proposed. The implications for the profession are outlined.

  Link to the full text of this article here.

• Explanation Provision in Knowledge-Based Systems: A Theory-Driven Approach for Knowledge Transfer Designs
  Authors: Georgia A. Smedley and Steve G. Sutton
  Pages: 41-61

  Abstract
  Knowledge-Based Systems (KBS) have been used in industry to free experts from mundane and routine decision making, to produce comparable and consistent decisions, and to retain the expertise of knowledgeable employees who may, for many reasons, leave a company. KBS are also desired to have the capacity to transfer knowledge to less-expert users of such systems. In this paper, Adaptive Character of Thought-Rational (ACT-R) theory is used as a foundation for the design of KBS explanations for the explicit purpose of facilitating knowledge transfer to the user. ACT-R (Anderson 1993) is a theory of cognitive skill acquisition that suggests a learner must first obtain certain facts about a new learning situation (declarative memory pieces) and then convert a series of facts into a set of rules that will produce accurate problem-solving skills (procedural memory pieces). Prior research has examined pieces of the ACT theory in its earlier forms, but no comprehensive tests examining the simultaneous effect of the multiple components have previously been completed.

  The current study addresses three questions based on ACT-R theory: (1) Can declarative-knowledge-based explanations improve declarative knowledge transfer? (2) Can declarative-knowledge-based explanations improve procedural knowledge transfer? (3) Can procedural-knowledge-based explanations improve procedural knowledge transfer? An experiment employing eight KBS, differing by types of KBS explanation prompts, which were designed to stimulate declarative and/or procedural knowledge transfer, was conducted with 294 accounting information systems students. An analysis of the results provides some support for the use of declarative-based KBS explanations for declarative knowledge transfer, strong support for the use of declarative-based KBS explanations for procedural knowledge transfer, but a lack of support for the use of procedural-based KBS explanations for procedural knowledge transfer. The results suggest that organizations may be able to improve the efficiency and effectiveness of training programs for knowledge workers through the application of KBS that include declarative knowledge-based explanations.

  Link to the full text of this article here.

• Enterprise Resource Planning (ERP) Systems: An Empirical Analysis of Benefits
  Author: Daniel E. O'Leary
  Pages: 63-72

  Abstract
  This paper uses a database, derived from a data repository, in order to do an analysis of enterprise resource planning (ERP) system benefits. ERP benefits are important for a number of reasons, including establishing a match between what ERP systems benefits are - as compared to ERP expectations - setting a benchmark for other firms, and measuring those benefits. ERP benefits also are central to the business case for deciding whether a firm will invest in an ERP system. It is found that some benefits vary across industry, while others seem to be important to firms independent of industry. In particular, tangible benefits are largely industry-independent, while intangible benefits vary across industry. In addition, when compared to an earlier study by Deloitte Consulting, the results are statistically consistent with their findings, but find substantial additional intangible benefits.

  Link to the full text of this article here.

• An XML Architecture for Operational Enterprise Ontologies
  Author: Guido L. Geerts
  Pages: 73-85

  Abstract
  What is an operational enterprise ontology, why would a company embrace it, and how can it be implemented? These are the issues addressed in this paper. An enterprise ontology answers the following question: What kinds of things should we represent in enterprise systems? It becomes operational when its specification is explicitly recorded and actively used by applications at run time. The primary motivation for considering an operational enterprise ontology is its ability to support application reuse across enterprise systems. XML is an emerging technology for recording, processing, and exchanging data. This paper illustrates how XML technologies can be used to implement operational enterprise ontologies.

  Link to the full text of this article here.

• Continuous Reporting and Continuous Assurance: Opportunities for Behavioral Accounting Research
  Authors: James E. Hunton, Arnold M. Wright and Sally Wright
  Pages: 91-102

  Abstract
  The movement to more continuous reporting (CR) and continuous assurance (CA) of financial statements appears to be a matter of when and how such changes will take place, rather than if they will occur. Research evidence suggests that computing infrastructures and software applications have advanced to the point where it is now technically and economically feasible to begin preparing and disseminating financial statements on at least a monthly basis (Hunton, Wright, and Wright 2003), and someday it is likely that full or partial financial and nonfinancial disclosures will be processed and presented in real time. Additionally, information consumers are demanding, and the Securities and Exchange Commission (SEC), American Institute of Certified Public Accountants (AICPA), and International Accounting Standards Board (IASB) are contemplating reporting and assurance changes of this nature. Thus, whether "continuous" is defined in terms of monthly, daily, hourly, or real-time reporting, rapidly converging market factors indicate that in the foreseeable future firms will publish and auditors will assure financial information on a more frequent basis than the current quarterly interval.

  The major challenge going forward for behavioral researchers in accounting is to investigate how changes of this nature might affect the decision-making processes and consequential outcomes of various constituent groups, such as investors, preparers, and assurers. The combinations of affected parties, contexts, and tasks that could be examined are too numerous to explore in a single article. Accordingly, to keep the following discussion focused and manageable, the scope of this paper is aimed at understanding the potential impact of CR and CA on individual investors. Perhaps by identifying a number of the psychological issues and reviewing some of the studies in this area, accounting behavioral researchers will be motivated to investigate many of the issues and opportunities related to this new and exciting line of research.

  Link to the full text of this article here.

Do please feel free to contact us with any queries or questions you have about anything you find on these pages - the section's webmanager, Andy Lymer, can be contacted on a.m.lymer@bham.ac.uk.