Is it All Hype? ChatGPT’s Performance and Disruptive Potential in the Accounting and Auditing Industries

53 Pages Posted: 3 Jun 2023 Last revised: 27 Nov 2023

See all articles by Marc Eulerich

Marc Eulerich

University of Duisburg-Essen, Mercator School of Management

Aida Sanatizadeh

University of Illinois at Chicago, College of Business Administration

Hamid Vakilzadeh

University of Wisconsin - Whitewater - College of Business and Economics

David A. Wood

Brigham Young University - School of Accountancy

Date Written: November 17, 2023

Abstract

ChatGPT frequently appears in the media, with many predicting significant disruptions, especially in the fields of accounting and auditing. Yet, prior research has demonstrated relatively poor performance of ChatGPT on student assessment questions. We extend this research to examine whether more recent ChatGPT models and capabilities can pass major accounting certification exams including the CPA, CMA, CIA, and EA (enrolled agent) certification exams. We find that the early released ChatGPT 3.5 model is unable to pass any exam (average score across all assessments of 53.1 percent). However, with additional enhancements, ChatGPT can pass all sections of each tested exam: moving to the ChatGPT 4 model improved scores by an average of 16.5 percent, providing 10-shot training improved scores an additional 6.6 percent, and allowing the model to use reasoning and acting (e.g., allow ChatGPT to use a calculator and other resources) improved scores an additional 8.9 percent. After all these improvements, ChatGPT passed all exams with an average score of 85.1 percent. This high performance indicates that ChatGPT has sufficient capabilities to potentially disrupt the accounting and auditing industries, which we discuss in detail. Lastly, this research provides practical insights for accounting professionals, investors, and stakeholders on how to adapt and mitigate the potential negative consequences of this cutting-edge technology in accounting and auditing firms.

Keywords: Artificial intelligence, chatbots, GPT 3.5, GTP 4.0, Accounting certification, large language model

JEL Classification: M4, M40, M42, M49

Suggested Citation

Eulerich, Marc and Sanatizadeh, Aida and Vakilzadeh, Hamid and Wood, David A., Is it All Hype? ChatGPT’s Performance and Disruptive Potential in the Accounting and Auditing Industries (November 17, 2023). Available at SSRN: https://ssrn.com/abstract=4452175 or http://dx.doi.org/10.2139/ssrn.4452175

Marc Eulerich

University of Duisburg-Essen, Mercator School of Management ( email )

Lotharstrasse 65
Duisburg, 47057
Germany
00492033792600 (Phone)

HOME PAGE: http://www.msm.uni-due.de/ircg

Aida Sanatizadeh

University of Illinois at Chicago, College of Business Administration ( email )

1200 W Harrison St
Chicago, IL 60607
United States

Hamid Vakilzadeh

University of Wisconsin - Whitewater - College of Business and Economics ( email )

Whitewater, WI 53190
United States

David A. Wood (Contact Author)

Brigham Young University - School of Accountancy ( email )

518 TNRB
Brigham Young University
Provo, UT 84602
United States
801-422-8642 (Phone)
801-422-0621 (Fax)

HOME PAGE: http://marriottschool.byu.edu/employee/employee.cfm?emp=daw44

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