Eli Fathi, CEO, MindBridge Ai
With major corporate scandals, decreasing consumer confidence, and the Big Four firms stopping consultancy work for audit clients, the UK accountancy industry is poised for a major shakeup.
As much as the discussion swirls around ethics and conflict of interest, with the Competition and Markets Authority recommending significant overhauls to the audit system, the role of emerging technology has been downplayed. It is imperative that regulators and industry firms of all sizes come together to recognise the capabilities of new technology, particularly artificial intelligence (AI), to address deep-seated problems in the audit market, from the erosion of trust in reporting to the trade-offs between audit quality and engagement times.
AI is uniquely poised to fix many of the symptoms of mistrust in audit. With the capacity to rapidly analyse and understand wholly complete data sets, instead of minuscule sample sizes, auditors would no longer have to rely on hunches and intuition to determine risk. As AI eliminates human bias from all stages of data analysis, identifying anomalies according to accepted audit standards and going beyond to spot risks that have never been conceived by a human brain, the technology will help firms of all sizes increase their audit quality and risk assurance, while decreasing engagement times.
Al will also help democratise the industry, providing strong analytical and risk measurement capability with low barriers to entry. Some small audit firms already use AI to identify the highest risk areas in client data, and ensuring that those are part of the audit selection. Not only does this remove chance and human bias from the equation, it helps justify the particulars of what was examined during the audit to provide greater assurance for clients.
As regulations toughen up and calls for splits between audit and advisory businesses increase, regulators and firms of all sizes must consider artificial intelligence as form of independence and safeguard, and a key enabler to smooth the transition towards the audit of tomorrow.