Accounting and Auditing Research

About the Authors xiii Preface xv 1 Introduction to Applied Professional Research 1 What Is Research? 2 Research Questions 3 Nature of Professional Research 5 Critical Thinking and Effective Communication 6 Economic Consequences of Standards Setting 7 Role of Research in the Accounting Firm 7 Skills Needed for the CPA Exam and Practice 9 Overview of the Research Process 10 Step One: Identify the Relevant Facts and Issues 11 Step Two: Collect the Evidence 12 Step Three: Analyze the Results and Identify the Alternatives 12 Step Four: Develop a Conclusion 13 Step Five: Communicate the Results 13 Data Analytics/AI in Accounting and Auditing Research 14 Summary 15 Discussion Questions 16 Exercises 17 2 AI’s Impact on Accounting and Auditing Research 18 Brief History of AI 19 Emergence of Generative AI 20 Large Language Models (LLMs): Development and Types 20 Limitations and Ethical Concerns of LLMs 21 Hallucinations in LLMs 21 Performance Limitations 22 Biases in Training Data 22 Ethical Concerns and Responsible Use 22 Legal Considerations 22 Lack of Transparency 23 Applications of Generative AI 24 Text Generation Translation and Summarization Through LLMs 24 Significance of User-Friendly Interfaces in LLM Accessibility 25 Revolutionizing the Accounting Landscape 25 Effective Prompts Engineering 26 General Tips for Prompt Engineering 26 Engineering Prompts for Accounting 27 Current Regulations of AI 29 Summary 30 Discussion Questions 30 Exercises 31 3 Critical Thinking and Effective Writing Skills for the Professional Accountant 32 Critical Thinking Skills 32 Levels of Thinking 34 Universal Elements of Reasoning 37 An Example of Using Critical Thinking Skills 38 Effective Writing Skills 39 Writing as a Process 40 Punctuation Primer 41 Improved Writing Skills Required 41 Active Voice 43 Short Sentences 43 Definite Concrete Everyday Language 43 Tabular Presentation 44 Limited Jargon and Technical Terms 44 No Multiple Negatives 44 Elements of Plain English 45 Writing Effective Texts e-mails and Letters 45 Writing Memos to the File 46 AI’s Impact on Communication 48 Summary 48 Discussion Questions 49 Exercises 49 4 The Environment of Accounting Research 52 The Accounting Environment 52 The SEC and the Standard-Setting Environment 53 Rules-Based vs. Principles-Based Accounting Standards 55 Financial Accounting Standards Board 56 FASB Strives to Simplify Standards 57 Content of Authorities 57 FASB Due Process 59 FASB Conceptual Framework Project 61 Statements of Financial Accounting Concepts Nos. 1–8 61 American Institute of Certified Public Accountants (AICPA) 62 Governmental Accounting Standards Board 63 Other Organizations Influencing Standard Setting 65 U.S. Generally Accepted Accounting Principles (U.S. GAAP) 67 The FASB Accounting Standards Codification TM 68 Using Authoritative Support 69 Reading an Authoritative Pronouncement 70 Accounting Choices Have Economic Consequences 72 AI and Standard Setters 72 Summary 73 Discussion Questions 73 Exercises 74 5 Financial Accounting Research Tools 76 Accounting Research Online 77 Database Research Strategies 77 Step One: Define the Information Needed 77 Step Two: Determine the Sources to Search 77 Step Three: Use Appropriate Search Methods 78 Step Four: View the Results and Manage the Information 78 Step Five: Communicate the Search Results 78 FASB Accounting Standards Codification TM Research System 78 The Research Process 80 Locating U.S. GAAP Using the Codification 83 Examples Using the Codification 84 SEC Accounting for Public Companies 85 SEC Regulations and Sources 86 The SEC’s Published Views and Interpretations 86 SEC Staff Policy/Interpretations 87 Accessing SEC Filings and Regulations 89 Cases to Practice Accounting Research 91 Data Analytics and AI for the Accounting Researcher 92 Summary 94 Discussion Questions 94 Exercises 95 Knowledge Busters: The Codification 98 6 The Environment of International Research 104 International Accounting Environment 104 IFRS Structure 107 IASB/ISSB/IFRIC Authorities 109 IASB and ISSB Due Process 110 Interpretations Committee Due Process 111 IASB’s Conceptual Framework 112 Principles-Based Accounting Standards 113 IFRS Funding Regulation and Enforcement 113 International Financial Reporting Standards (IFRS) Research 115 IFRS Hierarchy 115 IFRS Access 115 The Use of AI 117 Summary 118 Discussion Questions 118 Exercises 119 Accessing IFRS - IFRS Accounting/ISSB Sustainability Standards Navigator 120 Knowledge Busters 121 7 Other Research Databases and Tools 123 Database Research Strategies 123 Step One: Define the Information Needed 123 Step Two: Determine the Sources to Search 124 Step Three: Use Search Techniques and Tools 125 Step Four: View the Results and Manage the Information 126 Step Five: Communicate the Search Results 126 Commercial Accounting Databases and Tools 127 U.S. Accounting Research Tools 127 U.S. Government Accounting Databases 128 Financial Research Databases 129 Leading Publishers of Global Financial Information 130 S&P Capital IQ 131 Mergent Online 132 Other Financial Databases and Sources 133 Business Research Databases and Challenges 134 Article Index Sources 135 Other Specialized Research Sources 135 Legal Research Databases and Tools 136 LexisNexis Database Products 137 Westlaw Database Products 138 Recent Legal Database Competitors 139 AI’s Increased Presence in Databases 139 Summary 140 Discussion Questions 140 Exercises 141 AI Questions and Exercises 142 Knowledge Busters 143 Appendix 7A-1: Website Addresses 143 8 Tax Research for Compliance and Tax Planning 146 Tax Planning Goals Challenges and Databases 146 Tax Research Goals 147 Tax Research Challenges 148 Tax Research Databases 149 Primary Tax Authorities 150 Statutory Law: The Code 151 Administrative Law: The Treasury Regulations 153 Revenue Rulings and Revenue Procedures 155 Lesser Administrative Sources (Non-precedential) 155 Judicial Law: Court Cases 156 U.S. Tax Court 156 Other Judicial Sources of Authority 157 Steps in Conducting Tax Research 159 Step One: Investigate the Facts and Identify the Issues 159 Step Two: Collect the Appropriate Authorities 160 Step Three: Analyze the Research 163 Step Four: Develop the Reasoning and Conclusion 165 Step Five: Communicate the Results 166 Professional Concerns and Evolving Changes 168 Professional Standards for Tax Services 169 AI in Tax Research 170 Data Analytics in Tax Research 171 Summary 172 Discussion Questions 172 Exercises 173 AI Questions and Exercises 176 Knowledge Busters 176 Appendix 8A-1: Website Addresses 178 9 Assurance Services and Auditing Research 179 Assurance Services 179 Consulting Services and Standards 180 Attestation Services and Standards 182 Auditing Standard-Setting Environment 184 Auditing Standard-Setting Process 184 Public Company Accounting Oversight Board (PCAOB) 185 Auditing Standards Board (ASB) 186 International Auditing and Assurance Standards Board (IAASB) 190 AICPA Online Professional Library 190 AICPA Code of Professional Conduct 192 Thomson Reuters Checkpoint 194 Auditing Standards in the Public Sector 194 Preparation Compilation and Review Services 198 Role of Judgment and Professional Skepticism in Accounting and Auditing 199 Economic Consequences 200 Data Analytics/AI in Audit Practice & Research 200 Summary 202 Discussion Questions 202 Exercises 203 Knowledge Busters 204 10 Refining the Research Process 206 Method for Conducting Research 206 Step One: Identify the Preliminary Issues or Problems 207 Step Two: Collect the Evidence 211 Step Three: Analyze the Results and Identify Alternatives 216 Step Four: Develop a Conclusion 217 Step Five: Communicate the Results 218 Advice for the Future 220 Remain Current in Accounting Knowledge and Skills 220 Check AI But Don’t Rely on It 221 Understand Complexities in Practice 221 Develop Professional Skills Needed for Practice 222 Summary 223 Discussion Questions 223 Exercises 223 AI Questions and Exercises 224 Knowledge Busters 224 Appendix 10A-1: Certifications and Associations for Accounting Auditing and Tax 226 Appendix 10A-2: Research Sources from AICPA FASB PCAOB and Others 227 Appendix 10A-3: Abbreviations for International Canadian and U.K. Standards 229 11 Forensic Accounting Research 231 Forensic Accounting Standards 232 Definition of Fraud 233 Types of Fraud 233 The Fraud Triangle 234 Overview of a Financial Statement Fraud Examination 237 Step One: Identify the Issue and Plan the Investigation 238 Step Two: Gather the Evidence and Complete the Investigation Phase 238 Step Three: Evaluate the Evidence 239 Step Four: Report Findings to Management or Legal Counsel 240 Business Investigations 240 Computer Technology in Fraud Investigations 241 Data-Mining Software 241 Data Analytics 242 CaseWare IDEA 242 MindBridge Ai 243 ACL 244 Public Databases 244 Courthouse Records 244 Company Records 245 Online Databases 246 The Internet 246 Instant Checkmate (www.instantcheckmate.com) 247 Zoominfo.com (www.zoominfo.com) 247 Other Websites 247 AI in Forensic Accounting 247 Fraud Investigation Regulations 249 Summary 250 Discussion Questions 250 Exercises 250 Knowledge Busters 251 Index I- 1