An amazing AI system developed by Transparently.ai out of Singapore has just detected some serious accounting mischief brewing in the financial reports of 16 New Zealand companies. It’s like having a robot forensic accountant that can sniff out shady bookkeeping practices and expose them to the light of day. This cutting-edge AI was trained on a massive amount of company accounts, giving it the ability to spot common signs that someone is cooking the books. And let me tell you, these 16 companies scored above 50% on the manipulation risk score, which is not a good sign at all.
Now, the CEO of Transparently.ai, Hamish Macalister, who happens to be a Kiwi himself, is feeling deeply concerned about this situation. He revealed that on average, about 65 to 70% of stocks with risk scores over 50% experience some form of corporate collapse. That means their share prices take a nosedive and the companies could potentially shut down. And get this, around half of those collapses happen within three years. That’s some serious trouble brewing for these Kiwi companies.
Unfortunately, Macalister is not at liberty to reveal the names of the 16 companies causing all this commotion. Apparently, only subscribers get access to that juicy information. But what we do know is that they come from various sectors and there are no obvious common factors leading to their suspicious behavior. The AI has detected issues across the board, including problems with corporate governance, income quality, cash quality, and accruals management. It’s a real mess.
On the bright side, New Zealand as a whole seems to be doing pretty well when it comes to accounting manipulation. In fact, they rank eighth globally out of 40 countries, just ahead of the United States and way ahead of Australia. So, it’s not all doom and gloom for the Kiwis.
But let’s talk about this amazing AI and how it works. Transparently.ai’s Chief Technology Officer, Mauro Sauco, revealed that the AI has a whopping 150 different models, each focused on detecting a specific sign or method of account manipulation. It underwent both supervised and unsupervised training to fine-tune its ability to spot these red flags. In supervised training, expert accountants guided the AI through the process, teaching it to recognize the warning signs. In unsupervised training, the AI was given real company accounts where manipulation had taken place and left to its own devices to find patterns and symptoms of manipulation. It’s like the AI was constantly evolving and refining its skills to become an even better detective.
Transparently.ai launched this incredible AI back in August last year and already has over 100 users, mainly big shot enterprise customers. They claim that this AI can predict financial ruin more than two years before it happens. Now, that’s some seriously futuristic stuff right there.
Beyond just catching accounting manipulation, Macalister thinks this technology could be a game-changer when it comes to catching tax evaders. He believes regulators can use the AI to identify poor corporate governance practices and uncover methods of account manipulation that result in reduced tax payments. If companies start fiddling with their accruals and manipulating their non-cash line items to lower their reported profits, that’s a big fat red flag for tax dodging. And guess what? The AI can spot that too. Tax evaders beware!
But as amazing as this AI sounds, it’s not without its challenges. Macalister points out that many of these AI tools are like black boxes, with no transparency or explanation of how they come to their conclusions. Transparently.ai strives to address this issue by enabling their AI to provide a detailed account of its decision-making process. That way, everyone can see how it arrived at its findings. It’s all about accountability and transparency.
Now, there are regulators out there who are showing interest in using this AI technology, but they’re not from New Zealand. These regulators recognize the potential and power of this AI, but they’re still figuring out how to adopt and implement it effectively. The pace of technological development is astounding, and they want to make sure they’re ready for it.
So, there you have it, folks. An impressive AI system is shaking things up in New Zealand, uncovering accounting manipulation like never before. It’s like having a super-smart robot accountant scouring through financial records, setting off alarm bells when it detects shady practices. This technology has the power to revolutionize the way we detect fraud and bring accountability to the world of finance. It’s truly mind-blowing.