Tag: Ethical

  • The benefits and ethical issues of using AI in expert systems

    The benefits and ethical issues of using AI in expert systems

    Using AI in expert systems allows for the integration of intelligent capabilities into traditional rule-based systems. Its techniques, such as machine learning and natural language processing. They can enhance the knowledge representation and reasoning processes of expert systems.

    • Knowledge acquisition: They can assist in acquiring knowledge for expert systems by automatically extracting information from various sources, such as documents, databases, and the internet. This helps in building a more comprehensive knowledge base for the expert system.
    • Knowledge representation: It techniques provide flexible and efficient ways to represent and organize knowledge in expert systems. This includes the use of ontologies, semantic networks, and probabilistic models to represent complex relationships between entities and attributes.
    • Reasoning and decision-making: The algorithms support advanced reasoning and decision-making processes in expert systems. For example, machine learning algorithms can use to learn from data and improve the accuracy of predictions or recommendations made by the expert system.
    • Natural language processing: They can enhance the interaction between users and expert systems by enabling natural language processing capabilities. Also, This allows users to communicate with the system using everyday language and receive more intuitive responses.
    • Adaptive learning: It techniques can enable expert systems to adapt and improve over time. By continuously analyzing user interactions and feedback, the system can learn and refine its knowledge and reasoning processes to provide better recommendations or solutions.

    AI adds intelligence to expert systems by improving knowledge acquisition, representation, reasoning, decision-making, natural language processing, and adaptive learning capabilities. It enables expert systems to provide more accurate, efficient, and user-friendly solutions in various domains.

    What are the benefits and ethical issues of using AI in expert systems?

    Using AI in expert systems offers several benefits, but it also raises ethical concerns that need to be carefully addressed.

    What are the benefits and ethical issues of using AI in expert systems Image
    What are the benefits and ethical issues of using AI in expert systems? Photo by Sora Shimazaki.

    Let’s explore both aspects:

    Benefits of using AI in expert systems:

    1. Increased Efficiency: AI-driven expert systems can process vast amounts of data and information much faster than humans, leading to quicker and more accurate decision-making.
    2. Consistency: AI is not influenced by emotions or external factors, ensuring consistent decision-making and performance across different cases.
    3. 24/7 Availability: Expert systems can be available round-the-clock, providing assistance and expertise at any time. Which can be especially valuable in critical situations.
    4. Cost-Effectiveness: Once developed, expert systems can operate with minimal ongoing costs, making them a cost-effective solution for providing expert-level guidance.
    5. Scalability: AI-powered expert systems can handle a large number of users and cases simultaneously, making them scalable and adaptable to growing demand.
    6. Learning and Improvement: AI can continuously learn from new data and feedback, improving its performance and becoming even more accurate and effective over time.

    Ethical Issues of using AI in expert systems:

    1. Bias and Fairness: If the AI models used in expert systems train on biased data. They may perpetuate existing biases and discrimination, leading to unfair outcomes.
    2. Transparency and Explainability: AI models can be complex and difficult to interpret. Making it challenging to understand the reasons behind their decisions. Lack of transparency can lead to distrust and legal implications.
    3. Accountability: The responsibility for the decisions made by AI-powered expert systems may be unclear, especially if something goes wrong. Determining liability can be a complex legal and ethical issue.
    4. Data Privacy and Security: Expert systems require access to sensitive user data, raising concerns about data privacy and the potential for data breaches or misuse.
    5. Job Displacement: Implementation of AI-driven expert systems may lead to job displacement for human experts, which can have socio-economic implications.
    6. Unintended Consequences: AI systems may exhibit unforeseen behaviors or consequences. Especially if they learn from real-world interactions, which can pose ethical challenges.
    7. Reliance and Autonomy: Excessive reliance on AI-powered expert systems may lead to reduced human critical thinking and decision-making abilities, raising concerns about over-automation and loss of control.
    8. Informed Consent: If AI is used to provide medical or legal advice, obtaining informed consent from users becomes crucial. But ensuring they understand the limitations and risks can be challenging.

    To address these ethical issues, it is essential to implement robust safeguards and ethical guidelines in the design, development, and deployment of AI-powered expert systems. This includes addressing bias in data, ensuring transparency in decision-making, establishing accountability mechanisms, securing user data, and promoting ongoing monitoring and auditing of the AI models. Ethical considerations must be an integral part of the entire lifecycle of AI systems to ensure their responsible and beneficial use.

  • Creative Accounting: Definition, Motivation, and Ethical Considerations

    Creative Accounting: Definition, Motivation, and Ethical Considerations

    Creative accounting is a euphemism referring to accounting practices that may follow the letter of the rules of standard accounting practices but deviate from the spirit of those rules. The Concept of Creative Accounting: Definition of Creative Accounting, Motivation for Creative Accounting, the existence of Creative Accounting, and Ethical Perspective of Creative Accounting! They are characterized by excessive complication and the use of novel ways of characterizing income, assets, or liabilities and the intent to influence readers towards the interpretations desire by the authors.

    Learn, Explain Creative Accounting: Definition, Motivation, and Ethical Considerations!

    The terms “innovative” or “aggressive” are also sometimes used. Other synonyms include Cooking the books and Enronomics. Creative accounting is a euphemism referring to accounting practices that may follow the letter of the rules of standard accounting practices but deviate from the spirit of those rules – by Wikipedia.

    Definition of Creative Accounting:

    Creative accounts an accounting practice that falls outside the regulation and gives benefits to certain people. It can describe as a practice with a clear aim to interrupt the financial reporting process which affects reported income to make it looked normal; and, provides no true economic advantages to relevant parties like shareholders. Concisely, it is the transformation of financial accounting figures from what they are to what users desire by taking advantage of the accounting policies which permit by the accounting standard.

    Creative accounts a practice that potentially undertakes as a result of some individual care more on their interest and indirectly causes issues to arise in the ethical dimension of creative accounting. From the information perspective, agency theory gives a clear picture of the creative accounting scenario. Whereby managers misuse their privileged position in manipulating financial reporting in their interest which providing superior information content to the shareholder. Lack of personal skill or unwillingness to carry out detailed analysis making individual shareholders do not have a clear view of the effect of accounting manipulation gives a high possibility of the incidence of creative accounting.

    The motivation for Creative Accounting:

    Several motivations have to identify in stimulating the behavior of creative accounting in the organization. Firstly, the significant motivator for creative accounting is to report a decrease in business income to lower the tax paid. Second, to enable the company’s performance to appear better in the future; the company will maximize the reported loss to make a bad loss that year. This is calls ‘big bath’ accounting to smooth the income. Thirdly, to provide a positive view on expectations, securities valuation, and reduction on risk for analysts in anticipated capital market transactions; and, maintain the firm’s performance in analyst’s expectations.

    Other motivations are to manipulate profit to match the reported income to profit forecasts; and, to distract attention from negative news by boosting company profit figures through the change in accounting policies. Manager’s motivations in managing earning aim to report a stable growth in profit not only to reduce the perception of variability toward an organization’s earnings but also are about income measurement. To make the company faces less risk and gain more benefit in the aspect of raising funds; takeover bids as well as prevent the takeover by other companies.

    It is needed to maintain or promote the share price and create a good profit growth. To gain benefit from inside knowledge, the director of the company engages creative accounting to postpone the release of information to the market. Last but not least, many types of contractual rights, obligations, and constraints based on the amount reported in the accounts also motivate the company to apply creative accounts. What are the Role and Duties of the Management Accountant?

    The existence of Creative Accounting:

    Theoretically, the manager’s motivation in there is acceptable. However, certain companies apply a particular technique of creative accounting to some extent; for example, applied in the non-discretionary component of the bad debts provision. Other evidence is Classificatory smoothing by using the extraordinary items; such as pensions cost, dividends from unconsolidated subsidiaries, extraordinary charges and credits; and, research and development costs in manipulating the figure of income in financial statements.

    The behaviors can identify by having a thoughtful analysis of a financial statement or observe by the reasonably well-inform user of the financial statement. But, how clearness the users of statement observe creative accounting is questionable. Anyway, the value of the information contained in the financial statement is concerned even though financial statements give adequate information that enables users to adjust for them as certain investors rely on reported earning numbers in an income statement.

    Creative Accounting Definition Motivation and Ethical Considerations
    Creative Accounting: Definition, Motivation, and Ethical Considerations! #Pixabay.

    Ethical Perspective of Creative Accounting:

    There are some ethical issues concerning the exercise of creative accounting. Loopholes in accounting standards provide managers some spaces in the sense of manipulating the timing in income reporting. Accounting is a tool to supervise contracts between managers and financial groups, identify the possibility of accounting manipulation; and, how properly it reflected in pricing and contracting decisions. Ethics of bias in choosing accounting policy which implies in they can see through accounting regulators and management level.

    Managers tend to misapply accounting principles to give a better appearance in the financial statement to investors. Conflict of interest, client requests to alter account, and tax evasion are the most frequent ethical issues. Accountants’ attitudes toward creative accounting depend on whether it has arisen from the misuse of accounting principle and manipulation of transactions. Accountants more critical in the misuse of accounting principles as the accountant’s duty is rule-based; and, it falls within their expertise. Failure to act ethically may damage the reputation as an accountant unless he or she reports the abuse to the appropriate party. Slotting is not an acceptable accounting treatment in company practices.

    There is some action can take by accounting regulators to restrain creative accounting:
    • Decrease allowable accounting method or fixed method used in the different conditions so that the scope for choosing the accounting method can narrowly down. Companies should also be consistent in using the method chosen by them.
    • Some rules should establish to reduce the abuse of justice. For instance, International Accounting Standards presently have almost removed the “extraordinary item” from operating profit. Also, companies should be consistent in applying accounting policy to restrain the abuse of justice.
    • Implementation of “Substance over form” can decrease artificial transaction and this can make linked transactions become one as the whole.
    • To restrict the use of timing of the genuine transaction, item in the account should regularly evaluate. Also, the increases or decreases in value should state in the account each year the revaluation occurs. International Accounting Standards also tends to value items at fair value rather than historical cost.
    • Besides alteration in accounting regulations, ethical standards and governance codes must be properly executed to avoid individuals from performing creative accounts.
    How Enron Played the Game of Creative Accounting:

    According to Mulford, the expert in the field, the most common creative accounting practices include improper revenue recognition and misreporting expenses. However, Enron’s game, explains Mulford, involved special-purpose entities.

    “Enron conducted much of its business in these entities that they controlled. They transacted with themselves. That kind of self-dealing allowed them to report profits when they weren’t traditionally making a profit.”

    Though Mulford wrote the book before and published shortly after Enron’s dealings became public; the authors included a special note in the preface regarding the company’s accounting practices, noting that Enron’s; “investors and creditors had not fully discounted the risk associated with the firm’s trading activities; its off-balance sheet liabilities, and its related-party transactions”.

    The authors add they believe careful attention to steps outlined in The Financial Numbers Game; “would have provided an early alert to the possibility of developing problems”.