You have been assigned to audit the work-in-process accounts of a manufacturing firm. What are examples...

You have been assigned to audit the work-in-process accounts of a manufacturing firm. What are examples of how you can use machine learning to assist with your validation of balances?

Expert Solution

Below are the examples of how machine learning can be used to assist in validation of balances:

1. Machine learning can help in validation of opening balances with the previous year closing balance to identify any errors while carry forward to next reporting period.

2. Ratio analysis of balances can be done with the overall balances of all the accounts to identify any un-usual variances in the balances.

3. Ledger to ledger balance validation - Machine learning can help in ensuring that the accounting entries are posted correctly by reconciling the balances in the journals (like sales journal) with the customer balances and receipts during the period.

4. Machine learning in also assist in valuation of Inventory accounts by defining the logics as per IAS 2, which requires that the valuation should be done at the lower of Cost or Net realizable value (NRV). Machine learning can help in automating the inventory valuation process basis the inputs entered for cost and NRV.

5. Machine learning can also help in ensuring if the provisioning for bad debts is accurate as per the defined allowance % in the organization.

ekkarill92 answered 1 year ago

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