Auditing Assignment: Using Artificial Intelligence in Audit and Accounting
You are required to write a Critical Report on auditing assignment on one (1) selected academic journal article related to emerging audit technologies such as Data Analytics, Big Data, Blockchain, Artificial Intelligence.
Your selected academic article must meet the following criteria for selection:
- Article selected must be published between the years 2015-2021/forthcoming
- Article selected must be from a highly ranked journal – A*, A or B ranked only from the ABDC List.
Please refer to the 2019 Australian Business Deans Council (ABDC) Journal Quality List which is available at the following link: https://abdc.edu.au/research/abdc-journal-list/
Your Critical Report must address the following criteria:
- Evaluation of the journal article’s main contributions, including its strengths, weaknesses and recommendation/s for improvement.
- Outline how the emerging technology in your selected journal article (e.g. Data Analytics, Artificial Intelligence etc.) can be used in the Financial Report Audit. Your answer here should discuss two specific areas (within your Company context from Part 1) of the audit engagement that can be improved (for the auditor and audit client).
- What challenges do auditors face in adopting emerging technology on audit engagements? What opportunities are there for the audit profession and audit education to enhance the use and success of the emerging technology in auditing?
- Critical writing style, and convincing evaluation
This auditing assignment gives an insight into the occurrence of AI in auditing and accounting. The current capabilities of the cognitive technologies and its implication on the auditing is discussed. The main focus of the article is on the usage of the AI in the field of auditing and the manner in which in which it helps in the process of decision making.
The impact of AI on auditing will be more pronounced in the upcoming years due to development in technology. Both demand and supply have led to the increment of the AI in audit. As per the author there has been a passive improvement from the demand side while the supply both software and hardware add to the increment. To ensure a better coverage, the adoption of the software needs to be done concerning the organizational structure.
The strength of the article is that Modern AI tools can helps in scanning keywords and patterns in difficult electronic documents that helps in identification and extraction of the accounting information from different sources likes the sales, contracts and invoices. AI tools can help in spotting the records of the company that records unusual sales just before the reporting period end or disbursement of the high payments after the reporting period gets over. AI further helps in spotting the anomalies like the unexpected increment in the specific region or any high expense posted by the individual (Kokina & Davenport 2017).
However, the use of AI is not free from weakness. Potential bias can be created with the creation and utilization of AI discussing the future research implications. The data available for the business might be irregular and of poor quality and hence might project a huge challenge. Shortage of technical staff might be another issue and training might be necessary for the operation of the AI solution
The evidence indicates that the role of AI in auditing is enhancing rapidly. Hence, it is recommended that accounting researchers and practitioner will require collaborating on the transition so that guidance can be provided to firms and regulators.
Artificial intelligence solution can help in providing information both to the internal and external department of the organization. This can be potential useful for Westpac as it helps in recognition of the emerging risk and threat that haven’t been considered. Instead starting from scratch, AI will help the agency to inhabit a risk register that uses result from past data relating to benefit payments. AI can enable Westpac to provide information that is actionable and hence helps the internal auditor for mitigation of risk. The ongoing audit can be bettered. Transactions and account balance can be evaluated in a continuous manner. This will lead to better accuracy and assurance of the financial statement
AI can further help in streamlining the processes. For example, for controlling the spending, organization needs the approval of the management on invoices for definite amount. To increase the control, AI solution can evaluate the transactions as and when it happens and flags the ones that lead to violation of the pre-set rules. With the development of AI, software will have a greater increase to develop the skills to evaluate huge and complex data that would previously be unimaginable (Kokina & Davenport 2017). Thereby, eliminating the burdensome tasks of auditing from the human functioning will leads to more engaging tasks.
Auditor can utilize cognitive technology for the work redesign that will helps in analysing the structured and unstructured data. New technologies are helping the auditors to evaluate huge amount of company’s data and test the entire data of the company rather testing a sample. Tools that are sophisticated helps the auditor to perform the analytics that will enable to have an in-depth insight into the operations of the company (Ivy, Brown-Liburd & Miklos 2020).
New technology can help the auditor to evaluate the company’s financial data and test the entire range of transactions instead a sample. Tools that are sophisticated enable the auditor to perform better analytics for gaining deeper insight into the operations of the company. Further, data analytics will help the auditor to track and evaluate the trend of the clients against the geographical data set that leads to better evaluation throughout the process of audit. Hence, the use of technology will enable auditor to save time scrutinizing the complex and high areas of risk that needs enhanced judgment (Ivy, Brown-Liburd & Miklos 2020). AI tools might help the business to drive decision and does not lead to introduction of the audit risk. AI tools can lead to algorithms of advanced nature that helps in predicting the activity and management of the processes of business like the projection of the inventory level and the management of the cash flow needs or through monitoring the internal audit (Kokina & Davenport 2017).
Emerging technologies can help in bringing higher opportunities and efficiencies for the business and can lead to potential challenges. A proper knowledge of the emerging technologies and the awareness of the advantages and risks is beneficial to the auditor and the management as a whole.
Ivy, M., Brown-Liburd, H. & Miklos, V. 2020, ‘The Ethical Implications of Using Artificial Intelligence in Auditing: JBE’, Journal of Business Ethics, vol. 167, no. 2, pp. 209-234.
Kokina, J. & Davenport, T.H. 2017, ‘The Emergence of Artificial Intelligence: How Automation is Changing Auditing’, Auditing assignment Journal of Emerging Technologies in Accounting, vol. 14, no. 1, pp. 115.