Audit firms are using more AI, but still need human checks

In short: Big audit firms like KPMG and EY are rapidly adopting AI to review company finances, but they still need people closely involved to avoid mistakes and meet rules.

What's going on

Audit firms are using AI to help check large companies’ accounts. An audit is like an official inspection of a company’s financial records to see if they look accurate and honest.

The big change is scale. AI systems can scan millions of transactions, instead of auditors only checking a smaller sample. A KPMG leader compared it to filtering a whole river rather than scooping up a bucket of water to test.

Firms say this can help catch fraud and errors, and stop teams from being overwhelmed. EY has about 85,000 auditors globally, yet it carries out nearly twice that number of company audits each year, according to the article.

What to watch

Using AI does not reduce responsibility. Regulators can still demand that audit firms explain why they reached an opinion and what they did with specific transactions. Firms cannot simply say, “the system decided,” especially if the AI acts like a black box (meaning it gives an answer without a clear explanation).

There is also a risk of false negatives, where the AI fails to flag a real problem. The article warns that models can work well for a long time, then miss a new or unusual kind of transaction.

Another concern is training. If AI takes over basic tasks, junior auditors may not learn the skills they need. The UK audit regulator, the Financial Reporting Council, has warned against rushing into reliance on untested technology.

Source: Financial Times