The real benefit I am now beginning to see through this type of application is in its predictive value. We recently used deep learning technologies to “learn” from seven years of financial statements through six machine learning algorithms. This enabled us to survey enough data to better evaluate where restatement risks lie. The technologies make it possible to predict where future risks may occur and enable audit teams to revisit and refine their approach. They also present intriguing possibilities for the detection of fraud.
That predictive ability marks the next step in the evolution of AI, and allows auditors to carry out work like this more efficiently and with greater accuracy.
Interacting with the world
I describe the second phase of AI’s development as “interacting with the world.” This is already beginning to take shape in consumer products such as Amazon’s Alexa and Microsoft’s Cortana. These rely on voice recognition and other tools, and through the clever use of AI, they can respond to user demands in an intuitive way.
This interaction phase is still at an early stage, with relatively unsophisticated applications, but the work going into this is likely to transform the ways in which AI can be used to improve corporate performance. The convergence of technologies such as drones and the internet of things will enable AI to interact better with the material world and power what’s becoming known as the Fourth Industrial Revolution.
But the impact of AI won’t just be felt in the type of work auditors do with companies. In practical terms, its growth and development may well change the way talent is recruited. Indeed, rather than AI replacing professionals — and accountants in particular — it will demand different and new profiles.
We may need differently skilled people who are able to work across a wider range of disciplines. This next generation will need to understand accounting, the relevant industry and AI, blockchain and machine learning — as well as grasping how all these disruptive elements work together in a faster-paced, more complex world — to continue to deliver an added-value, high-quality audit.
These technologies, if applied thoughtfully and effectively, will improve quality, reduce risk and enhance confidence. In fact, the biggest challenge for both companies and their auditors and advisors goes beyond the technology: it’s about change management and the potential confusion over how AI is applied. Be reassured; AI can do a lot, but there’s also a lot it cannot do, and we cannot rely on it to deliver skepticism and judgment.
The future isn’t here yet, but AI brings it closer.