How Artificial Intelligence Will Change the Auditing Function

Artificial intelligence is the least adopted concept when it comes to auditing roles. Normally, artificial intelligence (AI) is associated with sci-fi and engineering concepts. Perhaps, it is considered to be linked with an IT firm only. In reality, if we look around us, AI has already made drastic changes in our businesses of all sizes.

The speed and pace at which technology is advancing, it remains highly unlikely to predict the true impacts of modern technologies such as AI. For the Finance Managers and Auditors alike, the impact of AI can be manifold. One way of assessing the AI impact is on the modernization of the businesses. The other way is to deal with the risks and threats posed by modern technologies like AI.

Auditors Will Have To Deal With Immensely Large Databases:

AI will take the digitization of data to a whole new level. The new AI systems equipped with cloud storage and modern technologies will process and possess huge databases. Every business will retain a large database to remain competitive.

Accounting and financial data have already been digitized. Internal auditors will have to deal with not only digitized financial data but AI-empowered data. In the near future, businesses will automate the routine bookkeeping tasks like journal entries of accounting transactions. Machine learning will drastically change the pace of data recording processing. We have already witnessed the machine learning impacts on other business fields, e.g. automatic translations and customer services tasks.

Keeping up with the Pace:

Just a few years ago, no business would require a social media presence. A decade ago, no business would have thought of a business website. Today, both of these are compulsions, not choices. Thanks to the swift pace of technological advancement, the auditing functions will rapidly too.

AI will not only speed up the accounting data recording, it will change the way it progresses. Business process lifecycles are hastily shortening with technology. A business nowadays can launch a new product within days not months of planning. Again, it remains a compulsion to stay competitive in the market, not a choice. The Auditing function will have to adapt to the pace at which businesses progress. They’ll have to evaluate the governance and compliance with the help of AI-empowered tools.

Evaluating new Risk classes with Artificial Intelligence Impact:

Auditing departments will have to create and assess new risks classes with new threats. As we’ve already witnessed in the cases of taking a business to e-commerce and social media platforms. Each innovation brings potential benefits and risks too.

We have seen recent “glitches” and data security breaches with global tech leading companies. Although the much-touted encrypted social media communication remains safe, it still is vulnerable. Similarly, financial and accounting data would face even greater risks and threats with new AI technology embedded businesses. It’s pertinent for auditors to stay as close to the potential risks arising with newer technologies as possible.

Will Automation disturb the Human Contribution in Auditing?

The short answer is YES. Automation and digitization are going to the next level of machine learning and robotics. The way coding has automated few business processes in e-commerce; AI will automate auditing functions too. Artificial intelligence will not only reduce the human interaction in auditing functions only but the whole business management.

It is one of the most critical and perhaps feared aspects of adapting to modern technology in any business segment. Machine learning and AI can embed new technology. Auditing and risk management will still have to be performed by humans. A closely similar example is automated trading. Machine learning has changed stock trading, yet human interaction and expertise remain invaluable.

Diversified Pool Of Talent And Roles in Auditing:

Honestly, it already is happening. The Finance and accounting workforce is no more limited to their core tasks. Every finance job needs you to be multi-skilled and multi-tasked. Auditors have already embedded new skillsets. A modern auditing team comprises of multi-skill and multi-task workforce, capable of evaluating modern tech-based businesses. A few years ago, there would have been no concept of specialized IT auditors. In a few years from now, an AI specialized auditor will become a new normal.

Modern technologies like blockchain and machine learning will require auditing to match these skills. The Auditing function will inevitably have to pool a newer talent pool with matching capabilities.

Artificial Intelligence “will” Change the Auditing Function- or “is” Changing?

Without any doubt, artificial intelligence has already made its mark on every business aspect. Auditing in general and finance function, in particular, is no exception to it too. The foremost thing auditors have to understand the pace at which the change is happening. The impacts of machine learning and artificial intelligence are manifold for any business.

In a nutshell, the auditing function is going through a rapid transition, not a slow and smooth one. The challenge for Auditors remains to harness the true potential of AI for their best advantage.