A quick stroll through the technological section of a newspaper, and you can figure out how artificial intelligence threatens numerous jobs and is likely to impact the major industries of the world. Similarly, AI will significantly impact the financial world.
While the world ponders over blockchain and the rise of a new kind of currency, the cryptos, a majority of people are yet to understand the importance of AI. Particularly in Pakistan, information and training about AI are limited to short seminars, and it is probable that AI will not hit Pakistan for another few years. Still, one can not be ignorant about AI.
Like any technological advancement, AI also focuses on making lives easier and basically, increasing cost-effectiveness. It is no hidden truth that auditors have tough jobs with tons of data to go over before finalizing their audit report on the financial statements and even then, they can never give absolute assurance about the said financial statements. The accuracy of their report lies in the amount of work they performed and the volume of data they went through.
With advancements in AI, it is vital for auditors to embrace the advanced technologies for this will allow them to analyze the full population of data and even help identify outliers. The fast-paced technology has already influenced accounting with companies majorly using applications like QuickBooks and Xero to prepare financial statements, and this alone has made auditors' work easy. However, AI can improve fraud detection through sophisticated machine learning.
According to EY’s website, ‘The audit is set to be further transformed by deep learning, a form of AI that can analyze unstructured data such as emails, social media posts and conference call audio files... In a recent pilot, AI tools were able to accurately extract information from lease contracts using pre-selected criteria in the vast majority of cases – a higher level of precision than the average human reviewer is capable of.’
With AI positively impacting auditing, one might wonder whether if there will be a need for auditors in the future. AI will not necessarily replace auditors. However, the ones who refuse to change with the advancing technology will find their jobs threatened. At this point, they need to understand the importance of AI and embrace it while they can and use it for their advantage.
AI can help an auditor to be more productive and efficient. With the help of big data analysis, auditors can go over large volumes of data in minimal time and focus on adding value to the audit process through other means which include but not limited to meeting with CFOs, audit panels, partners of the firms, etc.
The fact that the firms of the Big 4 have adapted to AI and have made substantial efforts in digitizing audit denotes its importance. An article on Forbes quoted Bill Tomazin, Regional Managing Partner at KPMG US, who stated, ‘Over the past three years, we've moved quickly into digitizing the audit and helping our auditors obtain structured data from our clients—and using technology to help them make better sense of that data. It's exhilarating because it helps our teams make better decisions and raises the quality of the audit.'
Thus, there is no doubt that AI will enhance the quality of audits in the future and perhaps make the work more exciting since most auditors are found complaining about the monotony of the job. All in all, the future for audit seems appealing with a lot to learn for auditors and chartered accountants and for firms to conduct better quality audits.
[Recently, ICAP held its technological conference where speakers talked about how the profession will be impacted due to blockchain and advancing technology. Click here to watch the whole conference: ICAP technology conference