An analysis on how Artificial Intelligence will impact the external audit

Abstract

PURPOSE: The objectives of this study are to analyse the impact that AI will have on the external audit sector, whether it would lead to positive or negative effects and what changes and skills auditors would have to adapt.

DESIGN: In order to achieve these research objectives, a qualitative methodology was adopted. A total of 9 semi-structured interviews were conducted with members of the Big Four audit firms and some of the mediumsized audit companies.

FINDINGS: This study finds a general lack of awareness amongst mediumsized companies while the opposite for the Big Four firms regarding the subject of Artificial Intelligence in the audit sector. Artificial Intelligence is still in its infancy in Malta and there is much more to be done. On the other hand, globally it is being introduced slowly and there are many systems in pilot stage or in place. As can be seen auditors will most likely not lose their job to the Artificial Intelligence system unless they resist the change and are unwilling to learn new things.

CONCLUSIONS: This study concludes that at present medium-sized companies are more focused on other current technology such as blockchain while Big Four firms are already embracing artificial intelligence. Therefore, Big Four firms are more proactive while medium-sized firms are reactive. In addition, increased awareness and training on artificial intelligence and more requirements for IT skills from new incomers may make this big change more at ease.

IMPLICATIONS: This study hopes to raise awareness about Artificial intelligence and its new advancements in the audit sector. Also, to enhance the need for companies to train their employees regarding this subject and keep them up-to-date about recent technology. The recommendations being suggested are meant for audit companies to reskill their employees and make them more knowledge from the IT side of things. Moreover, audit companies should explore ways of becoming more involved in this change and not resisting it.