Critical Factors for Accounting Estimation of Investment in Artificial Intelligence: an Imperative for Accounting Standards Setters in the Fourth Industrial Revolution Era
Keywords:
Algorithm, Intelligent Machines, Intangible Valuation, Financial ReportingAbstract
The major assets of the 21st century organisations have moved from the company premises to the cloud where the telescopic rules of accounting could not locate them. This study addressed the inadequacies of existing Accounting Principles and Standards in estimating Artificial Intelligence (AI) assets in the era of the fourth industrial revolution. Constant fusion of multiple technologies had substantially altered the nature of organizational non-current assets from tangible (physical) to intangible (non-physical). Assets considered as intangible by existing studies and accounting standards are largely goodwill, patents, trademarks, copyright, customer list etc while AI remains foreign to accounting valuation. The study employed desk-review to identify factors essential for policy review to accommodate further development in AI-accounting domain. The study found Intellectual property, increased investment AI assets, multi-functional savings, privacy infringement, ransoms and law suit among others as crucial for estimating AI assets in the 21st century. Estimating and reporting AI assets still domicile in an uninformative accounting environment. Therefore accounting practitioners, professional bodies, standard-setters, academics and researchers need to recognise and leverage its potential impacts on accounting education and organisational practices. The study concluded that AI assets should be capitalized using simple algorithm to promote the fairness of the financial reports.
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Strickland, E. (2018). Layoffs at Watson Health Reveal IBM’s Problem with AI IEEE Spectrum. https://spectrum.ieee.org/the-human-os/robotics/artificial-intelligence/layoffs-at-watson-health-reveal-ibms-problem-with-ai. Accessed on 30/05/2019.
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Taiwo and Edwin (2016). Effect of ICT on Accounting Information System and Organizational Performance. European Law Review, 8(6), 1-17.
Tsai, C., Lu, Y., Hung, Y. and Yen, D. C. (2016). Intangible Assets Evaluation: The Machine Learning Perspective. Neurocomputing, 175(A), 110-120.
Willingham, J. & Ribar, G. (1988). Development of an Expert Audit System for Loan Loss Evaluation. Auditor Productivity in the Year 2000, pp. 171-186. https://www.researchgate.net/publication/284495971_Development_of_an_expert_audit_system_for_loan_loss_evaluation.
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Zhangmingwu, P. J. (2011). Review on the Debate of Paper History during Recent 30 Years in China. Journal of the International Association of Paper Historians, 15(2).
Akinyemi, B.; Okoye, A. E. & Izedonmi, F. (2015). History and Development of Accounting in Perspective. International Journal of Sustainable Development Research, 1(2), pp. 14-20.
Artsberg, K. & Mehtiyeva, N. (2010). A Literature Review on Intangible Assets: Critical Questions for Standard Setters. School of Economics and Management, Lund University. https://pdfs.semanticscholar.org/f855/30d9d9b5ad7b7d58e3b8fe855ad2a6553cb3.pdf.
Basu and Waymire (2008). Has the Importance of Intangibles Really Grown? And if so, Why? Accounting and Business Research DOI: 10.1080/00014788.2008.9663331.
Cosmulese, C. L.; Grosu, V. & Hlaciuc, E. (2017). Intangible Assets with a High Degree of Difficulty in Estimating Their Value. Ecoforum 6, 3(13).
CPA.Com (2018). Accounting Technology Tomorrow Report. 1(1). https://www.cpa.com/sites/default/files/2018-assets/misc/accounting-technology-tomorrow-report-vol1-issue1-cpacom.pdf.
Davenport, T. H. (2018). From Analytics to Artificial Intelligence. Journal of Business Analytics 1(2), pp. 73-80. https://doi.org/10.1080/2573234X.2018.1543535.
Drees, J. (2019). Michigan Medical Practice to Close after Refusing to Pay Ransom to Hackers. Becker’s Health IT & CIO Report. https://www.beckershospitalreview.com/cybersecurity/michigan-medical-practice-to-close-after-refusing-to-pay-ransom-to-hackers.html. Accessed on 30/05/2019.
Facebook Annual Report (2015). Accessed on 17 March, 2019.
Graves, J. (2017). Artificial Intelligence and Big Data: An Untapped Competitive Advantage. https://www.qrious.co.nz/blog/artificial-intelligence-and-big-data-an-untapped-competitive-advantage. Accessed on 31/05/2019.
Halpin,L. & Dannemiller, D. (2019). Artificial Intelligence: The Next Frontier for Investment Management Firms - Deloitte. Available at: http://www2.deloitte-nl-fsi-artificial-intelligence-magmt.pdf/. Accessed on 09/04/2020.
Hanafizadeh, P.; Ghandchi, S. & Asgarimehr, M. (2017). Impact of Information Technology on Lifestyle: A Literature Review and Classificationi. International Journal of Virtual Communities and Social Networking, 9(2), DOI: 10.4018/1JVCSN.2017040101.
Jahmani, Y.; Dowling, W. A. & Torres, P. D. (2010). Goodwill Impairment: A New Window for Earnings Management. Journal of Business & Economics Research, 8, pp. 19-24.
Kamble, R. & Shah, D. (2018). Applications of Artificial Intelligence in Human Life. International Journal of Research Granthaalayah, 6(6), pp. 178-188.
Karimi, F.; Zare’ie & SalwmiNajafabadi, M. (2013). Estimating the Return on Investment Opportunities in Financial Markets and Establishing Optimized Portfolio by Artificial Intelligence. International Journal of Academic Research in Business and Social Sciences, 3(7), pp. 279-288.
Financial Reporting Lab (2019). Artificial Intelligence and Corporate Reporting: How does it Measure up? Financial Reporting LAB. https://www.frc.org.uk/getattachment/e213b335-927b-4750-90db-64139aee44f2/AI-and-Corporate-Reporting-Jan.pdf.
Lecot, K. (1988). Using Expert SYSTEMS in Banking. Expert System Review, June, pp. 17-20
Lev, B. (2004). Sharpening the Intangibles Edge. Financial Analysis. Harvard Business Review, June 2004. https://hbr.org/2004/06/sharpening-the-intangibles-edge.
Lu, Y.; Tsai, C. & Yen, D. (2010). Discovering Important Factors of Intangible Firm Value by Association Rules. The International Journal of Digital Accounting Research, 10, pp. 55-85.
Mahmood, M O. & Mann, G. J. (1993). Measuring the Organizational Impact of Information Technology Investment: An Exploratory Study. Journal of Management Information Systems, 10(1/), pp. 97-122.
O’Leary (2015). Value Creation from Expert Systems: An Economic Approach with Applications in Accounting, Auditing and Finance. Artificial Intelligence in Accounting and Auditing: Creating Value with AI, vol. 5.
O’Leary, D. & Turban, E. (1987). The Organization Impact of Expert System, Human System Management, 7, pp. 11-19.
Ovunda, A.S. (2015). Luca Pacioli’s Double-Entry System of Accounting: A critique. Research Journal of Finance and Accounting, 6(18), pp. 132-139.
Paavola, A. (2018). Apple has Quietly Hired Dozens of Physicians: 5 Things to Know. Becker’s Health IT and CIO Report. https://www.beckershospitalreview.com/healthcare-information-technology/apple-has-quietly-hired-dozens-of-physicians-5-things-to-know.html. Accessed on 30/05/2019.
Rayome, A. D. (2019). Why your Business should Consider Paying a Ransom to Hackers. Available at: https://www.techrepublic.com/article/why-your-business-should-consider-paying-a-ransom-to-hackers/. Accessed on 09/04/2020.
Rock (2018). Engineering Value: The Returns to Technological Talent and Investments in Artificial Intelligence. https://www.gsb.stanford.edu/sites/gsb/files/jmp_daniel-rock.pdf. Accessed on 05/06/2019.
Romer, P. M. (1990). Endogenous Technological Growth. Journal of Political Economy 3 (3), September, pp. 39-43.
Rosegger, G. (1986). The Economics of Production and Innovation. https://www.researchgate.net/publication/247850678_The_Economics_of_Production_and_Innovation.
Salawu, M. K. (2013). The Extent and Forms of Voluntary Disclosure of Financial Information on Internet in Nigeria: An Exploratory Study. International Journal of Financial Research, 4(1), pp. 110-119.
Salawu, M. K. & Moloi, T. (2018). Benefits of Legislating Cryptocurrencies: Perception of Nigerian Professional Accountants. Academy of Accounting and Financial Studies Journal, 22(6), pp. 1-17.
Šapkauskienė , A. & Leitonienė, S. (2014). The Analysis of Factors Influencing the Write-off of Goodwill. Procedia- Social and Behavioural Sciences, 156, pp. 643-647. https://doi.org/10.1016/j.sbspro.2014.11.256.
Shabbir, J. & Anwer, T (2015). Artificial Intelligence and its Role in Near Future. Journal of Latex Class Files 14(8).
Strickland, E. (2018). Layoffs at Watson Health Reveal IBM’s Problem with AI IEEE Spectrum. https://spectrum.ieee.org/the-human-os/robotics/artificial-intelligence/layoffs-at-watson-health-reveal-ibms-problem-with-ai. Accessed on 30/05/2019.
Sveiby, K. (2018). Methods for Measuring Intangible Assets. Update in 2010, https://www.researchgate.net/publication/327982460_Methods_for_Measuring_Intangible_Assets.
Taiwo and Edwin (2016). Effect of ICT on Accounting Information System and Organizational Performance. European Law Review, 8(6), 1-17.
Tsai, C., Lu, Y., Hung, Y. and Yen, D. C. (2016). Intangible Assets Evaluation: The Machine Learning Perspective. Neurocomputing, 175(A), 110-120.
Willingham, J. & Ribar, G. (1988). Development of an Expert Audit System for Loan Loss Evaluation. Auditor Productivity in the Year 2000, pp. 171-186. https://www.researchgate.net/publication/284495971_Development_of_an_expert_audit_system_for_loan_loss_evaluation.
Wilson & Daugherty (2018). Collaborative Intelligence: Humans and AI are Joining Forces. Harvard Business Review.
Zhangmingwu, P. J. (2011). Review on the Debate of Paper History during Recent 30 Years in China. Journal of the International Association of Paper Historians, 15(2).
Published
2020-04-30
How to Cite
Salawu, M. K. ., & Moloi, T. S. . (2020). Critical Factors for Accounting Estimation of Investment in Artificial Intelligence: an Imperative for Accounting Standards Setters in the Fourth Industrial Revolution Era: Array. The Journal of Accounting and Management, 10(1). Retrieved from https://dj.univ-danubius.ro/index.php/JAM/article/view/200
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