Presenting false data to investors is fraud, doesn't matter how it was generated. In fact, humans are quite good at "generating plausible looking data", doesn't mean human generated spreadsheets are fraud.
On the other hand, presenting truthful data to investors is distinctly not fraud, and this again does not depend on the generation method.
If humans "generate plausible looking data" despite any processes to ensure data quality they've likely engaged in willful fraud.
An LLM doing so needn't even be willful from the author's part. We're going to see issues with forecasts/slide decks full of inaccuracies that are hard to review.
I think my main point is just because an LLM can lie, doesn’t necessarily mean an LLM generated slide is fraud. It could very easily be correct and verified/certified by the accountant and not fraud. Just cuz the text was generated first by an LLM doesn’t mean fraud.
That being said, oh for sure this will lead to more incidental fraud (and deliberate fraud) and I’m sure it already has. Would be curious to see the prevalence of em-dash’s in 10k’s over the years.
Establishes that accountants who certify financials are liable if they are incorrect. In particular, if they have a reason to believe they might not be accurate and they certify anyway they are liable. And at this stage of development it’s pretty clear that you need to double check LLM generated numbers.
Obviously no clue if this would hold up with today’s court, but I also wasn’t making a legal statement before. I’m not a lawyer and I’m not trying to pretend to be one.
Completely understand the sentiment, but it doesn't apply here, because what's being generated are formulas!
Standardized 3-statement models in Excel are designed to be auditable, with or without AI, because (to only slightly simplify) every cell is either a blue input (which must come from standard exports of the company's accounting books, other auditable inventory/CRM/etc. data, or a visible hardcoded constant), or a black formula that cannot have hardcoded values, and must be simple.
If every buyer can audit, with tools like this, that the formulas match the verbal semantics of the model, there's even less incentive than there is now to fudge the formula level. (And with Wall Street conventions, there's nowhere to hide a prompt injection, because you're supposed to keep every formula to only a few characters, and use breakout "build" rows that can themselves be visually audited.)
And sure, you could conceivably use any AI tool to generate a plausible list of numbers at the input level, but that was equally easy, and equally dependent on context to be fraudulent or not, ever since that famous Excel 1990 elevator commercial: https://www.youtube.com/watch?v=kOO31qFmi9A&t=61s
At the end of the day, the difference between "they want to see this growth, let's fudge it" and "they want to see this growth, let's calculate the exact metrics we need to hit to make that happen, and be transparent about how that's feasible" has always been a matter of trust, not technology.
Tech like this means that people who want to do things the right way can do it as quickly as people who wanted to play loose with the numbers, and that's an equalizer that's on the right side of history.
Presenting false data to investors is fraud, doesn't matter how it was generated. In fact, humans are quite good at "generating plausible looking data", doesn't mean human generated spreadsheets are fraud.
On the other hand, presenting truthful data to investors is distinctly not fraud, and this again does not depend on the generation method.
If humans "generate plausible looking data" despite any processes to ensure data quality they've likely engaged in willful fraud.
An LLM doing so needn't even be willful from the author's part. We're going to see issues with forecasts/slide decks full of inaccuracies that are hard to review.
I think my main point is just because an LLM can lie, doesn’t necessarily mean an LLM generated slide is fraud. It could very easily be correct and verified/certified by the accountant and not fraud. Just cuz the text was generated first by an LLM doesn’t mean fraud.
That being said, oh for sure this will lead to more incidental fraud (and deliberate fraud) and I’m sure it already has. Would be curious to see the prevalence of em-dash’s in 10k’s over the years.
> doesn't matter how it was generated
is there precedent for this supposed ruling?
US v Simon 1969, see [0] for a review.
Establishes that accountants who certify financials are liable if they are incorrect. In particular, if they have a reason to believe they might not be accurate and they certify anyway they are liable. And at this stage of development it’s pretty clear that you need to double check LLM generated numbers.
Obviously no clue if this would hold up with today’s court, but I also wasn’t making a legal statement before. I’m not a lawyer and I’m not trying to pretend to be one.
[0] https://scholarship.law.stjohns.edu/cgi/viewcontent.cgi?arti...
Fascinating thank you for the link
You might have accidentally described what accounting is.
Completely understand the sentiment, but it doesn't apply here, because what's being generated are formulas!
Standardized 3-statement models in Excel are designed to be auditable, with or without AI, because (to only slightly simplify) every cell is either a blue input (which must come from standard exports of the company's accounting books, other auditable inventory/CRM/etc. data, or a visible hardcoded constant), or a black formula that cannot have hardcoded values, and must be simple.
If every buyer can audit, with tools like this, that the formulas match the verbal semantics of the model, there's even less incentive than there is now to fudge the formula level. (And with Wall Street conventions, there's nowhere to hide a prompt injection, because you're supposed to keep every formula to only a few characters, and use breakout "build" rows that can themselves be visually audited.)
And sure, you could conceivably use any AI tool to generate a plausible list of numbers at the input level, but that was equally easy, and equally dependent on context to be fraudulent or not, ever since that famous Excel 1990 elevator commercial: https://www.youtube.com/watch?v=kOO31qFmi9A&t=61s
At the end of the day, the difference between "they want to see this growth, let's fudge it" and "they want to see this growth, let's calculate the exact metrics we need to hit to make that happen, and be transparent about how that's feasible" has always been a matter of trust, not technology.
Tech like this means that people who want to do things the right way can do it as quickly as people who wanted to play loose with the numbers, and that's an equalizer that's on the right side of history.