The role and use of Artificial Intelligence (Al tools) in audits of financial statements

Abstract

Integrating artificial intelligence (AI) in the auditing function holds significant potential to transform the industry. As firms and stakeholders increasingly recognise the value of and demand audit quality, the accuracy, validity, and integrity of information generated by audit processes have become a vital consideration. Integrating AI into audit processes would be viewed as advancing audit techniques. However, the current limited adoption of this technology by audit firms raises concerns about their awareness of its transformative potential. This study aims to identify AI tools used in auditing and their impact on the audit process and quality. The study bridges the existing gap using a secondary exploratory method. Qualitative data was collected from transparency reports by the Big Four audit firms, i.e., KPMG, Deloitte, EY and PwC, and audit quality inspection reports for the four firms by FRC. For recency purposes, only reports published between 2020 and 2023 were considered. A thematic analysis of the data collected reveals that adoption of AI and data analytics in auditing is still low, and the Big Four firms are actively promoting increased adoption. The results demonstrate a notable disparity between potential and current applications, as shown by a clear gap between the publicised potential of AI and data analytics and their implementation within audit processes.