The world is evolving with the introduction of artificial intelligence (AI). Lawyers, teachers, administrators stand the risk of being booted out as it might not be efficient to use humans to carry out the function that programmes, app, robots can comfortably, effectively and efficiently do in time and cost-saving manner. The internal audit profession is not exempted from this global evolution.
In the twentieth century, a change of event in some of the activities that were manually carried out was displaced as technology brought in better equipment, instruments and machinery for carrying out the same tasks with lesser cost and time. Agriculture is carried out in a modernised mechanic way where heavy machines are used to displace many workers at the farm. In the automobile industry production line has been shortened with the use of robots to fast track the production and assembling of cars. In the manufacturing line, such as shoes, clothing technology has made it easy and cost-saving and useful to get production done within a short period.
For every breakthrough in any of the profession, there are naysayers; however, history has it that professions which fail to embrace new technologies tend to fade while those that adopted and adapted thrive. Technology development with an emphasis on artificial intelligence has ways of affecting the internal audit profession. In this article, readers will know how technology development is likely to affect the internal audit profession and what is the way forward to help make the internal audit profession thrive in an era of technological development.
How Artificial Intelligence (AI) affect internal audit and its operations
Ernst and Young’s website posited that technological development like AI promises to be a game-changer [1]. The above statement was fortified when the Institute of Internal Audit website stated that AI is the next digital frontier that the internal auditing profession cannot be left behind. Artificial intelligence (AI) is the ability of a machine or computer system to copy human intelligence processes, learn from experiences, adapt to new information and perform human-like activities [2]. “AI is hardware and software that are capable of behaving like the human brain: learning, reasoning, adapting, analysing, making decisions and performing a complex and judgement-driven task” [3]. AI is about finding the probability given a certain amount of data. With the above definition, Al has ways of assisting internal audit in their operations.
Here are some of the ways the AI will affect the internal audit:
- Fraud detections and patterns of fraud- with the use of data from industries AI can detect and determine the pattern of fraud that managements and other employees involved.
- Error detection – errors are wrongs that are perpetrated with no intent to defraud. AI can help in detecting errors in data and prescribe better options.
- AI can permit the auditing of a full population of data, not just random reviews, and identify outliers in data, and accounting entries.
- AI helps assess the potential legal and operational risks presented in a contract by reviewing its content and clauses.
- Al performs more and more in-depth review and highlighting questionable, exceptional or outlying data. Thus allow the internal auditor to ask smarter questions and probe a broader and deeper range of issues.
- The internal auditor can search for unstructured data from social media through deep learning for information that may affect the organisation or early opportunities, an indication of problems to have emerged.
However, it is essential to note that with the above areas that AI can help in the field of internal audit it has limitations as it cannot perform a task outside it program and this is where human common sense and experience becomes critical. AI and humans perform different but complementary tasks. AI does complex analysis with extensive multivariate data, matching of know patterns and identification of potentially new patterns.
Some technologist analysts are of the view that anything that can be reduced to data will be overtaken over by machines. Creativity and judgement are what differentiate one company from the others. On these bases, the internal auditor will apply his or her creativity and broad domain knowledge to evaluate risks which will make it impossible to displace internal auditor.
Automation through AI poses the risks of job losses as machines replace and perform a particular aspect of the human’s jobs. Machines are good at performing a quantitative function such as processing massive data and identifying patterns. However, humans are good at qualitative assessments, poorly defined situations, novel situations and issues that cross boundaries and are not cleanly split and soft skills. Humans and computers complement each other hence work better than either alone [4]
Loss of corporate memory, disrupt of corporate culture, and employee loyalty is lost when employees are replaced with the computers. AI applies to almost every area of endeavour, the private sector, public sector, health care, or non-profit. Nevertheless, and this is important, the more we automate everyday things, the more critical this makes the so-called “soft” or human, skills in areas like teamwork, leadership, empathy, common sense, inspiration and so on a fade in an organisation as these plays a significant role in the achievement of an organisational role.
Areas that Internal Auditor’s attention has to be the focus as AI is introduced are data privacy and security such as cybersecurity demand that internal audit become more aware of the possible damage that malicious actors can take over the AI. The internal auditor should take proactive measures in assuring the response to cyber threats, the safety of users and third parties.
The advancement of technology-artificial intelligence will help improve the work of the internal audit and will not displace the internal audit as the human factor such as common sense and creativity are needed to help complement the artificial intelligence.
Reference
[1]https://www.ey.com/en_gl/assurance/how-artificial-intelligence-will-transform-the-audit
[2] https://searchenterpriseai.techtarget.com/definition/AI-Artificial-Intelligence
[3] https://global.theiia.org/knowledge/Public%20Documents/Tone-at-the-Top-December-2017.pdf
[4]https://www.futuresearch.com/2019/06/26/future-tense-tomorrows-risks-and-the-future-of-internal-audit/
The writer is an Internal Auditor with the University of Cape Coast
