How will Artificial Intelligence (AI) change the way we audit?

There is a lot of talk surrounding AI and how it will come into our lives and take over our jobs. But is this the reality?

What is AI?

There are many definitions surrounding what AI is. The most ‘simple’ definition for AI seems to be the simulation of human intelligence processes by machines, especially computer systems.

How will AI affect the audits performed?

Audit work requires significant judgement to be exercised by the auditor themselves. AI software will enable auditors to make judgments about which financial statement areas will need the most investigation during the audit. This will help auditors perform audits more efficiently whilst focusing on the most significant areas.

Another significant use of AI during audits, will be analysing the risks related to the audit before a client is even accepted. This will enable the auditor to correctly decide whether the client meets the risk appetite of the firm and will also help the auditor determine a correct fee to match the risk profile of the prospective client.

With regards to testing procedures, using AI during the audit process will enable the auditor to analyse large amounts of data or even complete populations, with efficiency, something that currently is impossible to do at a human level without involving some form of computed procedures or spending unheard of amounts of hours to do so.

With clients storing data on the cloud, AI will enable auditors to perform real time auditing or risk analysis for clients and will not leave discovering any issues at the audit stage. Any findings will be resolved in real time providing benefits, both in terms of time and costs, to the client and the auditors in doing so.

One of the ‘downsides’ of using AI in audits, is how to train the junior staff in auditing the traditional way or at least developing their professional thinking. How to have them exercise professional judgement and form their own view regarding the risks related to the financial statements.

Overall, it seems the use of AI will not threaten our jobs, but rather give us the tools to enhance them.

It will enable:

  • Better quality audits to be performed, focusing on the right risks for each specific client.
  • Efficiency and cost effectiveness.
  • Deep dive into data, including real time identification of any issues.

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