How AI Audits Will Transform Auditing and Accountancy
Artificial intelligence (AI), machine learning, and a wealth of related technologies are having a massive impact on the business environment. Before discussing how AI for auditors will alter existing manual processes, we should firstly establish that AI simply refers to computer systems that exhibit something that resembles human intelligence. Essentially, AI works on complex tasks that involve either deep thought or expertise.
The rise of AI has been well-documented in industries such as healthcare, technology, education, and marketing, but AI is also set to transform the field of auditing. The increasingly impressive capabilities of AI will make this feasible in several areas of auditing, which will be discussed in this article.
Robotic Process Automation
The first most basic area where AI audits are already having an impact on auditing is with regard to automated entries. Robotic Process Automation (RPA) is able to simplify the process of data entry for accountants and auditors. This then eliminates some of the more onerous routine tasks from their work queues, such as the analysis of transactions and account fluctuations.
Data analytics technology is also making it possible for companies to engage in ongoing auditing. Transactions and account balances can be monitored continuously using AI technology. This provides higher levels of accuracy, along with assurance that financial statements are being vetted appropriately.
One of the biggest challenges in the auditing field is dealing with unstructured data, while also attempting to deliver data identification, extraction, and analysis at a faster pace. In an attempt to address this issue, audit firms and tech companies have entered into partnerships with the aim of speeding up data extraction and analytics. One such example of this is the collaboration between KPMG and IBM Watson.
The ensuing AI audit technology can then be used for tasks that require additional data extraction and organization before analysis takes place. This is another labour-intensive task, which machines will be able to manage in the foreseeable future, while being less prone to errors than human beings.
Machine Learning in Accounting
In attempting to embrace AI audits, accounting firms will have to get to grips with several different technologies, and each of these will impact on the future direction of the field. The first of these, machine learning, enables a machine to work with data rapidly by building algorithms and learning mechanisms, making deep analysis of big data possible.
Supervised machine learning algorithms are already used in accounting and auditing in order to optimize predictive models. But the future will see companies increasingly implementing machine learning across a wider scope of operations. This will help, for example, audit data mining to be conducted more accurately, thanks to the ability of machine learning to process hundreds of millions of items of transactional data.
From a business perspective, data mining can be used to increase revenue, respond to emerging trends, improve operational efficiency and optimize marketing. All of these can help deliver competitive advantages. And AI promises deep-diving into data that would be completely impossible via traditional methods.
Natural Language Processing
Another aspect of AI that will have an impact on auditing and accountancy is natural language processing. This technology enables computers to process everyday language and use it, with the most obvious manifestation being voice recognition technology and software. Natural language processing software is already used in auditing to help machines analyze and understand the structure and meaning of sentences.
This is a developing field, but it is expected that it will be possible to implement natural language processing in increasingly diverse areas going forward. Development of natural language processing will be deployed and prioritized in complicated cases, such as review of M&A contracts. AI platforms will increasingly integrate various datasets, rapidly learning and understanding new scenarios.
Audit Process Automation
Audit process automation is also set to have a massive impact on the auditing industry. This approach uses existing software to automate manual audit works. It helps to both reduce costs and increase the quality of service delivered. As AI has advanced, the scope of such process automation has extended, and this will expand still further in the future.
In particular, once robotic process automation becomes a common facet of auditing, companies in the auditing space will increasingly invest in the automation of judgment, based on deep learning technologies. This will inform better decision-making by recognizing patterns from dormant data in business software, eventually enabling organizations to make basic decisions based on this analysis. 
As AI develops, software will increasingly develop the ability to analyze huge swathes of complex data, which would previously have been considered unmanageable. Again, removing some of the more burdensome tasks of auditing from human operatives will free them up to work on more skilled and engaging tasks.
Will AI Replace Auditors?
As with any transformative technological development, some naysayers have predicted that the onset of AI audits could spell the demise of the auditing profession. However, this is unduly pessimistic. Most experts in the AI field see machine learning augmenting accountants and auditors, rather than replacing them. The role of auditors may evolve, while the skillset required in order to flourish may also change, but there is no prospect of AI auditors replacing human talent.
Where there could be an issue going forward for the industry is with regard to a skills gap related to AI and auditing. Overseeing these highly intelligent machines will become critical to the success of companies. And those with advanced knowledge of this complex technology may gain a commercial advantage. AI may solve many accountancy and auditing issues, but companies will still have to remain ahead of the curve in order to be competitive.
To discover how data analytics can improve your audit process, learn more about the capabilities of IDEA Data Analysis Software.