Humans consider themselves to be one of the most advanced and intelligent species on earth. Humankind has invented computers and numerous such modern technologies that have had a great impact on billions of lives. In the 21st century, experts claim that Human intelligence might not retain the top in the world. Artificial Intelligence or the intelligence possessed by machines is rapidly growing and might be a force to be reckoned with. AI is the new wave of technological advancement, which is taking the technology sector by storm.
AI can be applied to the audit in contract review. Machine learning tools allow humans to analyze a large number of contracts and leases in a much shorter time than is possible with a traditional manual review. In a recent project, AI tools were able to accurately extract information from lease contracts using pre-selected criteria. In the majority of cases, the AI performed at a higher level of precision than the average human reviewer is capable of.
By making it possible for auditors to work smarter, AI will help them to utilize their time more efficiently, enable them to use their human judgment to analyze a broader and deeper set of data and documents.
It will also enable them to ask better questions and to interact more with CFOs, audit committees and company boards. In this way, AI could contribute to providing better-quality audits and an exciting future for auditors. Auditing internal reports is a labour intensive work. The use of artificial intelligence can ease and improve that process.
In a recent survey, it was found that around 27% of the consumers were uncertain if their last customer service interaction was with a human or a chatbot. As the line between humans and bots vanishes, consumers are eager to get the best of both worlds. Around 62% people believe AI can reduce the time it takes to get answers while it is still highly tailored to their preferences.
When we talk of the service sector, it has been seen that 43% of millennials and 28% of business executives would pay for a hybrid service run by AI that offers direct access to humans, versus a human only service.
First, there is Business Process Automation. It is re-engineering existing business processes by using the software. Then there is robotic process automation (RPA) which is automating repetitive activities across multiple systems and interfaces. Then there is Intelligent Process Automation, which combines RPA with artificial intelligence technologies to identify patterns, learn over time, and optimize the workforces.
Finally comes the Algorithmic Business, which is the industrial use of a complex mathematical algorithm to drive improved business outputs. AI automated software can identify the risk that human cannot, it can detect unusual account combinations, unusual approvals, unusual day and time, the unusual user.
Account receivable (AR) listing is done through a manual process. AR listing anomaly detection through machine learning can hugely reduce time and labour to do it manually. MD&A review on steroids with natural language analysis and classification can be done by AI and that is a remarkable thing. A different view on stock count can be done by visual/image recognition. Digital auditing assistant can support auditing through voice recognition.
Humans who audit the algorithms will become crucial to businesses. Every company will become an IT/Analytics firm. In the short term they will use an algorithm in auditing but in the long run, they will audit algorithms.
Three factors are important in using AI in auditing. First is transparency, which is understanding of AI model decision making. Second is explainability, which is the understanding of the reason behind the decision taken by AI. The third is the probability that is mathematical certainty behind decisions.
However, the whole thing can be viewed from the lenses of philosophy too. Are human employees ready to accept their AI colleagues in the workplaces? Will all auditors be able to hold their job as their ethics merge with technology? These are some of the most difficult questions that need answering as soon as possible.
Rudra Prakash Sarkar