FROM STATIC BUDGETS TO COGNITIVE FORECASTS: HOW AI-SUPPORTED BUDGETARY PLANNING RESHAPES FINANCIAL REPORTING QUALITY IN IRAQI COMMERCIAL BANKS

Abstract

This study discusses the importance of budgeting systems supported by Artificial Intelligence in improving the quality of financial reporting and the development of accounting information systems in Iraqi commercial banks. The study assumes that the traditional budgeting systems are inaccurate, slow, and incapable of predicting the future, while AI technologies offer more sophisticated analytical and forecasting tools that enhance financial decision-making. Artificial intelligence and accounting information systems have been examined separately, but rarely as a single causal chain in a volatile banking environment. The study adopts a descriptive-analytical approach and models accounting information systems as a mediator between AI-supported budgeting and financial reporting quality. The measurement model satisfied conventional thresholds, with composite reliability between 0.895 and 0.924 and average variance extracted between 0.612 and 0.678. Structural estimation shows that AI-supported budgeting strongly predicts development of accounting information systems, which in turn predicts reporting quality, alongside a smaller but significant direct path. Decomposition indicates that the indirect route carries 59.4 percent of the total effect, establishing partial rather than full mediation. The findings suggest that integrating artificial intelligence into budgeting significantly enhances financial reporting quality and strengthens accounting information systems by improving data processing, reducing errors, and supporting real-time decision-making in Iraqi commercial banks.