J. C. van Dijk

The History of Artificial Intelligence

‘Cogito, ergo sum!’ I think, therefore I am! This may be an old saying, nevertheless, it is only in recent history that man recognized the human mind and its thought processes as the distinguishing characteristic of mankind, and as something apart from his or her physical characteristics.

Certification and Reporting

The judgement process that results in the expression of an opinion on financial statements or other reports, can be broken down into the following parts: Evaluation of the audit findings and conclusions; Formulating the audit opinion on the financial statements.

Auditing — An Introduction

Expert systems are tailored to individual applications and the environment in which they function, just as conventional computer systems are. Applications in an audit environment must be tailored to the audit philosophy of the organization, to its clients profile, to business sectors that are strongly represented among its clients, etc. Expert audit systems will operate differently in the various organizations, functionally, technically, in area of application, etc.

Progress Control and Quality Control

Progress control and quality assurance are often looked upon as two parts of the same process. But there is no causal relationship between these two activities. There is a practical relationship insofar as these activities may be carried out simultaneously, but even this is not necessary. If they are carried out jointly, the reason must be that the size of the audit team does not permit a functional specialization for each of these activities.

Artificial Intelligence — Parent Science of Expert Systems

People involved in artificial intelligence have often defined it as follows: ‘if it works, it is no longer artificial intelligence’.

The First Practice Applications

Once the strategic choices have been made and the appropriate long term plans developed, the choice must be made for a first application to start off with. If the choice is comprehensive automation of the total audit process, then the start will be the development of a conceptual audit model. If the strategic choice is for an end-result system to gain initial experience, then the choice of the initial application is germane.

Recording, Evaluating and Testing Controls

Once the planning process has commenced, an insight must be gained in the quality of the organization and the system of internal controls before we can map out the next phases of the audit process. This insight is acquired by: (1) recording the systems, including the organization and internal controls; (2) evaluating the systems and controls; (3) testing these, to confirm our understanding of them, and to verify their continued functioning.

Expert Systems and the Role of Internal Audit

Of the three main sources for expert audit systems, academics, public accounting firms and internal audit groups, the latter group might easily be forgotten, if one looks at publications only. Internal auditors seem to have less inclination to seek publicity. Internal audit systems are generally dedicated to their own environment and applications. Sometimes, they are transferred to other companies, but that will generally be in the same industry. Portability between companies depends largely on the initial system design. If they have not been designed with portability in mind, then it will rarely be achieved.

Initiating the Audit Process

No audit strategy can be prepared without clearly defined audit objectives. The initial step in the audit process is the development of an audit strategy geared to realizing the audit objectives and to the client’s organization. As indicated in Appendix ‘A’, the logical start of the process falls earlier, with the acceptance and confirmation that the audit assignment is precise. But functionally the step of accepting the assignment is really the final phase of a preceding process, the marketing. Anyway, they are closely related, and agreement on the assignment should imply agreement on the objectives.

Introduction: Computers, Impact And Perspective

Much has been written about the impact of computerization. It is certainly not the intention to repeat that here. But it may be useful to identify some of the influences of computers, on society in general, which, after all, is the environment in which auditors function, and then on the audit profession.