As artificial intelligence and automation technologies advance, they are being used in a variety of fields to automate operations that were previously done manually. With every industry leveraging its benefits, let’s explore how AI may be used in the internal audit department.
Internal audit, as the Third Line of Defense (LOD), is under tremendous pressure to meet stakeholders’ compliance and assurance requirements. Internal audit performance-based assessments serve the goal of reporting to the audit committee and senior management on the state of their organization’s governance, processes, procedures, risks, controls, case reports and much more.
With the large documentation volume and slow audit responses, there remains a challenge with internal audit to provide efficient audit reports that can be well understood and accepted by the higher management. All the data visualization and reporting techniques developed by AI will present new opportunities for the transformation of corporate governance.
Have we, as auditors, considered how these technologies can assist internal auditors?
Internal auditors are constantly under pressure to provide value to traditional audit procedures, and these automation technologies assist them in enhancing the value they contribute to their auditing techniques. Artificial intelligence leveraging algorithms to identify and understand patterns and anomalies within data sets can help internal auditors more efficiently identify risks and execute many other tasks more easily.
In some organizations, IA departments have already begun their journey into the world of automation by expanding their use of traditional analytics to include predictive models, robotic process automation (RPA), and cognitive intelligence (CI). Audit quality, speed, and competition for efficiency are drivers of artificial intelligence adoption.
Benefits AI brings in the internal audit process
There are many benefits from AI leveraging automation in each phase of the audit, starting with risk assessments, audit planning, fieldwork and reporting. With AI being implemented in these phases, there are below common benefits it brings to the table:
- Increased efficiency and cost optimization: Automation helps in getting the audit tasks implemented round the clock at an accelerated pace. Reducing the manual tasks helps the internal audit teams to concentrate on more important things related to the audit findings and provide their results in a very efficient way.
- Better resource utilization: As we minimize manual activities, this increases the capacity of management to better focus on the higher-value activities. This, in turn, allows an organization to keep pace with new technological risks and business challenges. AI also helps management to assign internal audit tasks.
- Increased business value: The data analysis techniques that are used by AI provide auditors with a holistic view of the samples that are analyzed, giving them increased assurance.
Increased potential of internal audit with use of AI
Artificial intelligence tools consider both internal and external information to an organization, thus helping auditors recognize emerging threats and intelligence that they haven’t yet considered. AI would help auditors to determine findings from all the transactions that might otherwise go unnoticed due to the large chunks of data manually. Also, AI programs can reveal the presence of fraudulent transactions.
AI data analytics techniques and batch processing can enable internal auditors to model data and quantify the findings. These analytic techniques also help internal auditors to generate the audit dashboard to showcase and track all the audit activities.
With AI data aggregation and integration, internal audit teams can streamline processes and procedures. All the clear data related to audits and processes can help management have an overview of all the inefficient procedures and findings in an illustrative manner.
Amplifying audit’s expertise
With AI applications, internal auditors have an opportunity to lend their expertise in auditing and examine more details of audit findings. Free from long burdened manual processes and tedious documentation tasks, IA department can now focus more on better development of audits and plan them efficiently. Effectiveness and quality can also be increased through AI, helping auditors in their daily activities. Organizations should develop clear measures of AI success, including assessing how accurately the AI solution is identifying problems and automating tasks.