AI Chatbot as IFRS Advisory Tool: GPT‐4 Experimental Design

What the paper says

The complexity of International Financial Reporting Standards (IFRS) challenges accounting professionals to navigate intricate judgment calls and estimations. This paper tackles a pressing question: Can OpenAI's ChatGPT (Version GPT‐4) serve as a reliable artificial intelligence (AI) advisory tool to interpret and apply IFRS standards in real‐world scenarios? The importance of this inquiry lies in the potential of generative AI to revolutionize financial reporting by enhancing accuracy, efficiency, and decision‐making speed, which are critical demands in today's globalized financial environment. Through an experimental design employing practical case studies, this research evaluates GPT‐4's performance under three prompting strategies: zero shot (ZS), few shot (FS), and chain of thought (CoT). This research examines the ability of AI to address judgment‐driven, complex IFRS problems, expanding the scope of prior studies that primarily relied on theoretical exams or professional certification tests. Our findings reveal that GPT‐4 can consistently identify the correct IFRS standard and produce professionally usable guidance, exhibiting strong potential. ZS proved fastest and most practical for a first advisory pass, FS delivered more structured and accounting‐like answers but required greater preparation, and CoT generated the richest explanations at the expense of efficiency. Across all strategies, expert review remained necessary in areas involving item and measurement choices, contract integration, or business‐model interpretation. This study efforts to advance the dialogue on AI's role in accounting and lays a foundation for future research exploring its broader implications in accounting decision‐making. With insights into GPT‐4's strengths and constraints, this study emphasizes its role as a transformative, yet supplementary, tool in advancing IFRS compliance and reporting standards.