Could artificial intelligence in auditing be the new frontier in providing fast, accurate, and resource-efficient audits?
At PWC, they call it “Audit IQ”, and they say every good auditor has it: a mix of accounting acumen, professional skepticism, and industry expertise. We think the definition should also include a congenital love for numbers, a sensuous thrill when finding others’ mistakes and the enviable ability to stand an extremely tedious dayjob.
But repetitive activities are error prone and even for auditors with the highest “Audit IQ”, reviewing large amounts of data within a short time frame, with little or no time remaining to focus on high-level activities, can be challenging. Can automation and artificial intelligence come in handy here?
There is an endless stream of data that is created, collected, and processed every day, including financial statements, tax work papers, invoices, returns. Performing an audit is growing more difficult: the amount of meaningful data to process has been increasing; more labour is required to effectively process it, while the time available remains the same. Assigning more eyes on paper may be enough to keep up (for now), however, it is not a winning strategy in the long run.
Instilling trust with a proven solution
Auditors offer their characteristically critical eye while investigating a company’s financial statements to provide an honest and measured audit opinion to the capital markets. However, given the exponential increase in information to dissect, analyze, and interpret, instilling trust in the veracity of an audit’s findings and conclusions is a difficult task.
Due to its demonstrated efficiency, the push for organizations to integrate AI into every application possible has been a well-established practice for quite some time. In fact, many have already employed artificial intelligence in auditing to sift through data points, such as contracts, expenses, and receivables.
A prime example where artificial intelligence is an indispensable asset for auditors is IFRS 16. This international standard for reporting shapes how companies can account for leases in their financial disclosures. As a result, an auditor may need to review thousands of lease contracts from numerous organizations and extract the relevant information that needs to flow into the financial statements.
Machine learning technology analyzes and recognises major data insights and key clauses in lease contracts and allows for the extraction of other information critical to an audit.
AI reduces time-intensive routine tasks and allows auditors to focus on data analysis and interpretation.
Clean and comprehensive auditing
Cognitiv+’s core features enable auditors to outsource the most time-consuming and repetitive aspects of reviewing financial documents and compiling information.
Review acceleration: Cognitiv+ automatically reviews documents at scale and extracts key points, creating a clear summary that can be exported in a structured and searchable Excel table.
Document Comparison: Cognitiv+ uses artificial intelligence to compare new documents against a database of known and approved documents, flagging differences and identifying potential issues.
Being able to extract and visualize important data means that it’s easier to detect changes in patterns, potentially identifying critical issues. For instance, the software can help detect changes in patterns of invoices over time like unusual invoiced items, quantities or amounts based on previous history.
The technology can also analyse entire sets of expenses, categorise them and potentially expose non-authorised claims.
Cognitiv+ is ready-for-use right out the gate but can be personalized, so users can select to identify and extract specific items from contracts and financial documents.
An increased level of customization that allows the software to automatically recognize user-specified provisions. With the software’s ability to be fine-tuned to handle an outsourceable task, auditors can focus on providing a more detailed analysis in crucial areas of review.
The bright side of an abundance of data
Although the sheer amount of data to process may seem like only another obstacle for auditors to overcome, with the right tools, it provides the opportunity to create more precise audits than previously thought possible.
Artificial intelligence in auditing offers a scalable solution that is specifically designed to help auditors stay ahead of the curve by positioning them in front of the data.