We are now in an era which is impacted by digitization and Artificial Intelligence (AI). Many industries are seeing AI introduced in areas where traditional processes have operated. The audit profession is no different. AI is a powerful tool that can automate certain tasks and analyse data, identifying relevant key terms and issues in seconds. As AI technology is rapidly expanding, its impact on auditing practices, particularly in respect to generating efficiencies and assisting in detecting anomalies and irregularities is significantly increasing.

We have set out below some of the insights on the evolving impact of AI in auditing:

Data Extracting and Processing

One of the most impactful contributions of AI to the auditing profession is its ability to extract and process massive amounts of data accurately making it more efficient for the audit team to assess and analyse the important sections in a contract or agreement. This vastly improves the ability to process and consider the accounting implications in the financial statements.

For example, the implementation of Copilot, which is an approved AI tool of the firm, assisted auditors in several ways:

  • Summarising the relevant key terms and conditions of a loan agreement such as relevant dates, payment amounts and compliance in bank covenants;
  • Extracting data in a contract to assess its implications in audit testing;
  • Automating data reading such as invoices, bank statements, and other documents; and
  • Identifying anomalies such as fraud that might be overlooked by human analysis, providing greater assurance to stakeholders.

Reducing Errors and Improving Accuracy

Human errors such as data entry and calculation mistakes can have huge consequences in the operations of the business. AI can perform automation and real-time checks on financial records, which can help auditors in detecting anomalies and irregularities in the system. This can further assist auditors to analyse and focus on significant and high-risk areas in planning the audit approach which can overall improve the accuracy and reliability of the audit service.

Transforming Auditing Processes

AI is quickly becoming a key element to transform the auditing processes nowadays which help auditors become more efficient and effective in providing audit services to clients.

Using AI as a tool is significantly reducing the time to perform manual reviews of supporting documents and long agreements that is normally a time-consuming task. It is assisting auditors to deliver faster results and provide timely insights to clients without compromising audit quality thus further enhancing client trust and loyalty.

The above-mentioned points are some of the main benefits of using AI in our audits. Whilst AI offers huge advantages in our profession, it is not a replacement for professional judgment. It is important to understand the full potential of using AI whilst we, auditors remain alert and always have the questioning mind. Auditors must verify and check the results, references and sources, and exercise professional scepticism to ensure accuracy and integrity.

Overall, AI is unlocking new opportunities and advantages to the auditing profession. By leveraging AI-driven results, auditors will be better placed to identify fraud and provide real-time assurance to various stakeholders. For clients, this means greater confidence in audit integrity thereby improving the overall productivity and results on the operations of the business.

HLB Mann Judd has extensive experience in providing audit service offerings to meet the needs of our clients.

If you are keen to understand how we can assist you with an accounting or auditing issue, please reach out for further information.

Co-written by Kyle Pervera, Manager, Audit & Assurance Melbourne