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:: Volume 9, Issue 17 (9-2024) ::
aapc 2024, 9(17): 155-186 Back to browse issues page
Analyzing the Tone of Emphasis of Matter Paragraphs in Audit Reports Using the GPT Language Model: Examining the Impact of Auditor Type and Gender Diversity of Partners
Hassan Farajzadeh Dehkordi 1, Zahra Lotfi Khademloo2 , Amir Kazem3
1- Assistant Professor of Accounting, Kharazmi University, Tehran, Iran. (Corresponding Author). ha.dehkordi@khu.ac.ir , ha.dehkordi@khu.ac.ir
2- MSc. Student in Accounting, Kharazmi University, Tehran, Iran. zahra.lotfikh@gmail.com
3- MSc in Financial Economics, Sharif University of Technology, Teharn, Iran. amir.kazem@sharif.edu
Abstract:   (238 Views)
Since, according to Auditing Standard 706, the auditor highlights important information or disclosures in the financial statements through the inclusion of an Emphasis of Matter (EOM) paragraph in the audit report, the auditor’s discretion in choosing words and phrases for these paragraphs provides a unique opportunity to examine the tone of the auditor's report. This study, using natural language processing based on artificial intelligence, analyzes the tone of 2,699 EOM paragraphs from audit reports of 233 companies listed on the Tehran Stock Exchange over the period from 2016 to 2023, examining its relationship with two characteristics: auditor type and auditors gender diversity. Within the framework of Auditing Standard 706, it is expected that the tone of the EOM paragraph will be neutral. However, the results show that the tone of these paragraphs was "positive" in 10% of cases and "negative" in 35% of cases. Furthermore, the Audit Organization and Moafidrahbar Audit Institute use negative tones more frequently than other audit firms. Finally, gender diversity among audit team partners is associated with a positive tone in EOM paragraphs. Overall, the results suggest that the tone of EOM paragraphs may likely serve as a tool for conveying the auditor's perspective on the information in the financial statements to users.
Keywords: Natural Language Processing (NLP), Artificial Intelligence (AI), Audit Report Tone, Emphasis of Matter Paragraph (EOM).
Full-Text [PDF 7225 kb]   (30 Downloads)    
Type of Study: Applicable | Subject: Special
Received: 2024/11/13 | Accepted: 2024/12/21 | Published: 2025/01/11
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Farajzadeh Dehkordi H, Lotfi Khademloo Z, Kazem A. Analyzing the Tone of Emphasis of Matter Paragraphs in Audit Reports Using the GPT Language Model: Examining the Impact of Auditor Type and Gender Diversity of Partners. aapc 2024; 9 (17) :155-186
URL: http://aapc.khu.ac.ir/article-1-1288-en.html


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Volume 9, Issue 17 (9-2024) Back to browse issues page
دوفصلنامه علمی حسابداری ارزشی و رفتاری journal of Value & Behavioral  Accounting
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