Investigating AI’s influence on auditing professionals : a big 4 firm case study

Abstract

PURPOSE: The primary aim of this study is to identify the influence of AI on the role of the audit profession. The objectives of the study are to (i) identify any opportunities and challenges that influence auditors, (ii) explore the impact of AI on auditors' job roles and responsibilities, (iii) analyse the influence of AI on four different key operational streams which directly influence auditors, and (iv) examine any ethical and moral implications of AI adoption on auditing practices. DESIGN: To achieve the study’s objectives, a mixed-method methodology incorporating a case study approach was adopted. Quantitative analysis compared current data with a previous study, gathered via electronic questionnaires distributed to approximately 70 auditors in a specific Big 4 firm. Qualitative insights were obtained through 7 semi-structured interviews with auditors ranging from associates to partners. A single firm case study was conducted due to the extensive nature of the study and to obtain richer insights, which wouldn’t have been possible otherwise. FINDINGS: The study found that 42.6% of participants were unsure about their AI knowledge, while 59.3% lacked confidence in their familiarity with the technology. However, 72% expressed belief in AI’s potential to benefit auditing, in both the short and long term. Although adoption has increased compared to previous years, development remains low, indicating cautious progress. Auditors exhibit more recognition of Assisted and Augmented AI types compared to Autonomous AI, which they remain sceptical about. Opportunities for auditors are vast, but challenges involve data security, training, programming errors, bias and other potential obstacles. Training is identified as a major factor contributing to slow progress, with participants noting varied exposure and lack of hands-on experience with AI tools. Additionally, 46.3% of respondents believe current ethical regulations are insufficient, while nearly 43% are neutral. CONCLUSIONS: Given the lack of knowledge about the proper use and deployment of AI, its current usability remains relatively low, suggesting room for improvement through research and development. While AI demonstrates efficacy in handling mundane tasks, the necessity for human judgment persists, particularly in the context of more autonomous functionalities, highlighting its complementary role rather than a substitutive one. Increased regulation, awareness, and AI tool development could facilitate auditors transitioning to auditing AI systems, underscoring the importance of shifting auditors' mindsets. VALUE: The study aims to raise awareness and to highlight the benefits of AI for audit professionals in Big 4 firms. The recommendations can guide firms, auditors, and stakeholders to better grasp AI's concepts, potentially prompting regulators for further guidance, significantly propelling development in this area.