Artificial Intelligence for Audit, Forensic Accounting, and Valuation

A Strategic Perspective

Al Naqvi

• Publisher: Wiley
• Year: 2020
• ISBN:
  9781119601937
• Edition: 1
• Topic: Business
• Subtopic: Accounting
• Index: Business

Strategically integrate AI into your organization to compete in the tech era

The rise of artificial intelligence is nothing short of a technological revolution. AI is poised to completely transform accounting and auditing professions, yet its current application within these areas is limited and fragmented. Existing AI implementations tend to solve very narrow business issues, rather than serving as a powerful tech framework for next-generation accounting. Artificial Intelligence for Audit, Forensic Accounting, and Valuation provides a strategic viewpoint on how AI can be comprehensively integrated within audit management, leading to better automated models, forensic accounting, and beyond.

No other book on the market takes such a wide-ranging approach to using AI in audit and accounting. With this guide, you'll be able to build an innovative, automated accounting strategy, using artificial intelligence as the cornerstone and foundation. This is a must, because AI is quickly growing to be the single competitive factor for audit and accounting firms. With better AI comes better results. If you aren't integrating AI and automation in the strategic DNA of your business, you're at risk of being left behind.

• See how artificial intelligence can form the cornerstone of integrated, automated audit and accounting services
• Learn how to build AI into your organization to remain competitive in the era of automation
• Go beyond siloed AI implementations to modernize and deliver results across the organization
• Understand and overcome the governance and leadership challenges inherent in AI strategy

Accounting and auditing firms need a comprehensive framework for intelligent, automation-centric modernization. Artificial Intelligence for Audit, Forensic Accounting, and Valuation delivers just that—a plan to evolve legacy firms by building firmwide AI capabilities.

PART I
Foundations for AI and Audit

PART ONE ORIENTS YOU TO THE artificial intelligence revolution and prepares you for Part Two and Part Three, which are focused on audit automation and forensic accounting automation. Approaching it from a historical, business, and technical perspective, it is composed of six chapters. The first two chapters explain the underlying drivers of the artificial intelligence (AI) emergence as a global phenomenon. Chapter 3 to Chapter 5 explain AI and machine learning in a gentle and business friendly manner. Specifically, Chapter 5 introduces various algorithms but does so in a manner that people with no formal training in AI or technical background will be able to follow. Chapter 6 focuses on business analysis tools that are used to develop requirements and use cases for artificial intelligence applications.

CHAPTER 1
Introduction: Staying Ahead of the Emergent Risk

THE AI TECHNOLOGICAL REVOLUTION is sweeping through the globe. Audit is no exception. The world of audit is about to change. With not just automation, but intelligent automation, the future of traditional, mostly manual, audit is being redesigned. IAA, or intelligent audit automation, is the next generation of audit services that encapsulates new audit business models, new audit professionals, new types of tools and techniques, new standards, and new ways of looking at knowledge creation. Welcome to the bold and new world of intelligent automation.

As your guide on this journey, my goal will be to first introduce to you the era of intelligent automation. It is important for you to recognize that intelligent automation is not just a phase or a temporary detour or even the next step in the evolution of the digital technology. It is an era of its own. Together we will walk through this amazing entrance that will lead us into a completely new age for humankind. The era of nonhuman intelligent workforce. Once past that point, we will then pick up some tools of the trade so we can develop a perspective about the nuts and bolts needed to function in these revolutionary times. These nuts and bolts – essentially our toolkits – will help us proceed to the next level of audit automation. The toolkits are general, so even if you are not an auditor trying to learn about how to automate audit, they will come in handy. Equipped with the toolkits, we will enter the realm of total audit automation.

As I walk you through this amazingly new and exciting world, I recognize that you are a businessperson who wants to learn about Intelligent Audit Automation. That is why my goal will not be to turn you into a data science expert or a machine learning guru, but instead to turn you into a visionary practitioner who can lead, guide, develop, and manage organizational transformations that can take a firm from today's AIS (accounting information systems) – centric capabilities to a totally and comprehensively automated audit organization. My goal is to equip you with the knowledge that will allow you to lead a legacy audit firm or audit department and turn it into one of the world's most advanced and automated firms. I do recognize that you may feel awkward or uncomfortable with the words “total automation of the audit organization” – mostly because that statement somehow comes with a billboard that says: “Humans not needed.” That is not the case. If anything, as you will see in this book, there will be tremendous need for humans – but it will be in a little different capacity than we are used to. Do not worry, as we will address those issues also.

What IAA will do is not to eliminate human work, but instead eliminate human weaknesses that make human work prone to mistakes, errors, biases, and misconduct. It will create a more perfect human work product.

Like you, I am also concerned about the audit profession. If we take an inventory of where we stand, it is highly troubling. With rising criticism, scandals, audit failures, and growing anxiety among both practitioners and clients, the profession's future seems uncertain. When combined with slow‐moving nepotistic knowledge creation, declining audit quality, and lack of innovation, we are confronted with the loss of the profession's credibility. No wonder regulators and governments are losing their patience. All these unfavorable conditions have placed the profession in disarray.

As we think about upgrading and improving the profession, we know that it will require a two‐pronged approach that will include improving audit quality while reducing the cost of audit. IAA is the natural answer to accomplish that goal. Whether we want to eliminate the problems and challenges of audit, or we want to automate the audit process, our gateway to the future of audit is artificial intelligence (AI). This book is all you will need to develop a comprehensive understanding and strategy of audit automation with AI.

KILLER ROBOTS AND AUDIT

Pick up any general article on artificial intelligence and it likely begins with some anxiety‐inducing sentence like “The mention of the words artificial intelligence brings to mind images of killer robots and autonomous drones flying over our heads” – and the next sentence is usually designed to reduce our anxiety and is something like “Don't worry, even though AI is here, there is nothing killer about it.”

Unlike other authors who, at this point, will tell you to relax, and declare that all those sci‐fi scenarios are the works of Hollywood's imagination, I will tell you the opposite. I will inform you that it is true that both killer robots and autonomous drones are now part of our world. In fact, even though many people will state that the technology is “not there yet,” I will say the reverse. Looking at how rapidly the technology has developed in AI, nothing seems impossible or too far‐fetched at this point. This applies to killer robots, and it applies to the field of audit. We can hope that the human civilization will use AI responsibly and not for destructive purposes. One of those extremely responsible and valuable uses of AI is in audit.

Audit is the foundation over which the entire global economy rests. Breaches or cracks in the foundation can easily crash the global economy. Therefore, it is incumbent upon us to protect the global economy by improving the audit quality and doing so with the best technology available to us.

If you are a businessperson, a professional auditor, internal auditor, or member of a finance organization, you will naturally want to learn about artificial intelligence. When you start exploring, it is likely that you will not get your answers from the IT department, or from general books on IT technologies, or from the highly confusing articles on machine learning and AI. It feels like you need a PhD in mathematics to read even a simple article on machine learning. I teach executives like you, and I know the problems they encounter when trying to understand AI.

The overwhelming complexity, when combined with its novelty, makes the field unapproachable. And that is where many businesspeople lose interest or stop caring about the great opportunities that await those who dare to pursue. But in this book things will be different. I will guide you through the complexities of the AI field in a manner that any businessperson will be able to follow the most relevant and important areas of the field. I want to equip you with only those things that will impact your audit transformation and save you from details that are unnecessary for a businessperson to know. If you find that some parts of the artificial intelligence field interest you more than others, you can then pursue other avenues to learn more or get trained in those areas.

Despite its business orientation, this book is not a pie‐in‐the‐sky, wishful, futuristic, motivational book about artificial intelligence. Those feel‐good types of books fail to acknowledge on‐the‐ground constraints and realities of technology. They also don't serve the needs of the practitioners who want applied knowledge and who want to learn things they can apply right away in their business. I wanted to give you a toolkit that you can deploy the next day in your business.

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Table of contents

• Cover
• Table of Contents
• Preface
• Acknowledgments
• PART I: Foundations for AI and Audit
• PART II: Building the Automated Audit Function in the Enterprise
• PART III: Forensic Accounting Automation
• PART IV: Management, Organization, and Governance for AI in Audit
• Index
• End User License Agreement