AI is is already being applied in areas as varied as driverless cars, home energy systems and investment portfolio management. Accounting and auditing will also be affected.
AI enables the analysis of a full population of data and can identify outliers or exceptions.
The term “AI” describes computing systems that exhibit some form of human intelligence. It covers a number of interlinked technologies including data mining, machine learning, speech recognition, image recognition and sentiment analysis.
For instance, machine learning can be used to automatically code accounting entries. By creating sophisticated machine learning-based models, auditors can also improve fraud detection.
The audit is set to be further transformed by deep learning, a form of AI that can analyze unstructured data such as emails, social media posts and conference call audio files.
An example of how AI can be applied to the audit is in contract review. Machine learning tools allow humans to analyze a larger number of contracts, such as leases, in a much shorter timeframe than is possible with a traditional manual review. In a recent pilot, AI tools were able to accurately extract information from lease contracts using pre-selected criteria in the vast majority of cases – a higher level of precision than the average human reviewer is capable of.
By making it possible for auditors to work better and smarter, AI will help them to optimize their time, enabling them to use their human judgment to analyze a broader and deeper set of data and documents.
It also enables them to ask better questions and to interact more with CFOs, audit committees and company boards, adding value to the audit process. In this way, AI could contribute to providing better-quality audits – and an exciting future for auditors.