All eyes on: AI in Audit 2024

Welcome to the audit of the future as businesses tap into the remarkable power of artificial intelligence. AI has the potential to transform the audit process through automation, data analysis, continuous auditing and enhanced risk assessment, empowering auditors to have a more meaningful impact. Many business benefits are already emerging in the areas of insight generation, trend and anomaly detection, risk control and data-enabled decision making.

In our recent study, AI in financial reporting and audit: Navigating the new eraopens in a new tab we found that nearly 72 percent of companies surveyed are already piloting or using AI in financial reporting and is set to reach 99 percent in three years.

KPMG firms are among the leaders in bringing the power of AI to the audit process. One example is through our implementation of KPMG Clara AI transaction scoring powered by MindBridge. This is a sophisticated platform and tool that analyzes transactions on a more-granular level to enhance audit quality. It effectively scores each individual transaction by applying rules-based, advanced statistical and machine learning algorithms, allowing KPMG auditors to look at complete data sets and focus on the greatest areas of risk.

We take a different – and collaborative – approach that’s beneficial both to KPMG auditors and KPMG firms’ clients. From an auditor's perspective, we're focusing on what matters to clearly understand the flow of transactions and identifying the transactions at greater risk of error. At the same time, we maintain productive conversations with clients around transactions that pose greater risk.

Microsoft Copilot is a new, fast evolving and highly productive AI tool that acts as a personal assistant while using the Microsoft 365 suite of applications. It enables KPMG audit professionals to focus on the more complex and risk-based areas of the audit. For example, applying large language models to Microsoft applications such as Teams, Word, Outlook, PowerPoint etc, as well as calendars, emails, chats – it effectively puts AI at our fingertips to enhance audit productivity and can help KPMG firms deliver exceptional results for clients. As our global researchopens in a new tab shows, more than two-thirds of organizations surveyed tell us that they want their auditors to prioritize the use of AI for data analysis and quality management. Copilot accelerates content creation, eliminates repetitive tasks, and improves decision making – allowing KPMG auditors to concentrate on what they do best. It’s a remarkably powerful technology solution that firms are rolling out globally as we take KPMG’s audit process into a new era.

KPMG firms are implementing AI into our KPMG Clara financial statements through KPMG Clara AI, a technology solution powered by Microsoft Azure OpenAI – a generative AI solution that uses large language models to generate human-like responses to auditors. This has countless applications, and we are implementing new use cases into the KPMG Clara platform. For example, KPMG professionals can benefit from the prompt library to document their understanding of data or to analyze documents provided by the entity. It’s important to note, however, that output generated from this technology solution is not intended to be a substitute for auditors and will always require professional judgement and skepticism to verify that the responses are accurate and appropriate. 

AI is rapidly providing new opportunities and benefits for businesses and society by transforming workplaces and key industries. As AI becomes increasingly prevalent in business and daily life, however, significant concerns exist regarding AI’s ethical use and potential risks.

This includes a focus on emerging regulatory requirements, for example the European Union AI Act – the world’s first comprehensive AI law. This landmark legislation aims to protect fundamental rights, democratic values, the rule of law and environmental sustainability amid AI risks1 – while boosting innovation and establishing Europe as a leader in the field. Companies doing business in the EU will now need to assess the impact and requirements of the Act and KPMG firms are playing an important role in providing guidance and required assurance as this revolutionary technology gains momentum. Our global researchopens in a new tab shows that 64 percent of companies expect their auditors to have a role in evaluating AI use in financial reporting and to provide assurance over their AI controls.  

KPMG Trusted AI framework is our strategic approach and framework for designing, building, deploying and using AI strategies and technology solutions in a responsible and ethical manner. KPMG firms are committed to upholding ethical standards for AI tech solutions that align with KPMG values and professional standards – and that foster the trust of KPMG clients, people, communities and regulators. We are steadfast in our commitment to act in a way that serves the public interest, honors public trust and demonstrates our commitment to professional excellence.