Artificial Intelligence (AI) is reshaping how we live, work, and even learn. Most of us are familiar with AI via chatbots imitating human-like conversations – think Siri, Alexa, and Google Assistant technologies. In the audit profession, AI often incorporates technologies such as data mining, machine learning, and natural processing language. However, what remains unfamiliar to our auditing students is how AI is impacting the audit profession and our graduates’ future job prospects.
AI Investment Booms, Uncertainty Looms
This uncertainty is partly attributed to current auditing textbooks and auditing standards guidance lagging behind emerging AI innovations. Companies such as EY, PwC, KPMG, and Deloitte have invested $9 billion on AI and data analytics products. For instance, KPMG’s Clara audit platform has predictive forecasting, AI, and machine learning that complements human insights by improving fraud detection. It analyses unstructured data found in emails and contracts, for example. PwC has also developed and piloted GL.ai to analyse abnormalities in general ledgers, with EY’s Helix and Deloitte’s Argus following suit, all with AI capabilities. Read more about how the Big Four Invest Billions in Tech, Reshaping Their Identities.
We are not there yet – AI audit tools are still evolving and yet to be applied completely to external financial audits. Critics suggest AI is consumed by their consulting arm rather than accounting services. These AI applications can’t “think” for themselves, despite their powerful data and analytics capabilities.
Yet the recent trend of students moving away from accounting majors to data analytics courses coincides with audit practice reality. Manual and repetitive audit tasks, previously performed by our graduate auditors, are now performed by advanced AI data analytics tools. Some predict that almost half of all financial audits will be performed using AI by 2025 to provide better quality audits. See Is Artificial Intelligence Making Audit Firms More Efficient? (Fedyk et al., 2021). Many students are thinking twice about joining the audit profession. Many aspire to be consultants!
Uncertainty surrounds the impact of AI technologies on students’ workplace prospects and the extent of reliance on machine-based intelligence. Yet there are ethical considerations and new skill requirements in this new AI world. The Big4 publicity drive continues to focus on augmentation rather than automation opportunities, as EY’s Global Assurance Innovation Leader Jeanne Boillet explains:
AI has the potential to transform audit, but it will never replace the auditor.AI in the Accounting Big Four – Comparing Deloitte, PwC, KPMG, and EY
Bringing AI Research Into Audit Workshops
Recent research suggests AI will not only reduce repetitive tasks and the risk of human error on audits but will also shift the focus of accounting units to include computer skills such as data management and data cleansing (Holmes & Douglass, 2021). The Accounting Discipline of the University of Sydney Business School is on trend here, offering Designing Accounting systems and Data Analytics for Accounting units.
In auditing workshops, our teaching team has designed assessments where student groups bring recent AI audit research alive via presentations, addressing and reflecting on the big questions. We ask students to critically examine the claims of the Big4 for AI initiatives. Will AI improve audit quality? Does AI create a competitive edge in the assurance and consulting market? Students are encouraged to help their peers understand how AI is (or not) used on audits, in a creative and engaging manner. The presentations are thought-provoking with information debated (not located in textbooks!) from emerging contemporary academic research and thought leadership papers, with some students remarking:
We had no idea about these advancements to audit practice!
The presentations are supplemented by exposing students to data analytics and visual dashboard demonstrations, using products such as Qlik and Tableau, though more needs to be done here.
Where To Next?
Prominent international expert on audit technologies Professor Vasarhelyi from Rutgers University claims:
Accounting education needs to dramatically change.CPA Podcast
Why? Working with AI requires a different skillset – already reflected in accounting firms’ preference for graduates with accounting fundamentals coupled with programming/data management skills. Upskilling graduates still seeking to enter the audit profession is a priority. While we also use video audit case studies developed with PwC partner Matthew Lunn and manager Caroline Russell, more opportunities need to be explored with Big4 firms to develop digital resources and student experiences that bring the audit classroom in line with digital transformations in audit practice.
We’re looking forward to an AI audit future.