Unlocking the opportunities of AI as Audit enters a new age

Everywhere you look, businesses are integrating AI into their systems, processes, and customer interactions, to increase insight, efficiency and responsiveness. Generative AI in particular has captured the public’s imagination to become a hot area of focus.

Across industries AI has the potential to unlock greater value, and I believe that audit is no exception. In fact, bringing AI into audit is a natural next step on the ongoing digital journey, which has already seen the introduction of transformative data analysis and machine learning capabilities. In fact, 72% of financial reporting leaders in the US believe that external auditors are ahead of financial reporting functions on using AI, and expect them to be using AI to enhance audit quality¹.

KPMG has established a strong mindset of innovation through our smart audit platform, KPMG Clara, which KPMG firms are using to serve audit clients globally. KPMG Clara is designed to deliver a consistent risk focused audit, with embedded digital audit capabilities, leveraging data directly from client financial systems to enable improved client collaboration capabilities. As just one example, KPMG firms’ audits around the world now perform automated matching of cash to revenue using data from client accounting systems.

Earlier this month, KPMG launched its KPMG Trusted AI approach, built on the principles of fairness, transparency, explainability, accountability, data integrity, reliability, security, safety, privacy, and sustainability.  The ten-pillar guide is KPMG’s strategic framework to help design, build, deploy, and use AI tech solutions in a responsible and ethical manner while also accelerating value and making the difference for clients, people and communities. Based upon the fundamental framework, we are also developing an approach to how we implement such principles specifically to audit. 

Today, with the KPMG Clara platform, KPMG professionals are applying AI with its diverse facets such as machine learning, deep learning and large language models.

We are prioritizing our investment in AI because we recognize the massive potential to enhance audit quality while also helping KPMG audit professionals work smarter. For example, AI can interrogate vast amounts of data to identify risks and, through automated analysis, generate audit evidence. Instead of manually auditing random samples of transactions, KPMG teams are using AI to analyze complete data populations and identify outliers and high-risk transactions to help laser-focus attention in relevant areas. AI enables auditors to spend more time on higher risk areas, which helps drive quality and insight in the audit.

KPMG audit teams are seeing that the mode of AI usage can be fine-tuned according to different purposes, making it an adaptable tool. AI capabilities can cover a wide spectrum from “co-piloting” capabilities, which support the day-to-day work of an auditor to “auto-piloting” capabilities which perform analysis and generate audit evidence responding to specific financial and non-financial risks. Auto-piloting requires the highest degrees of transparency, explainability and the ability to reperform the analysis, while co-piloting leverages citations and model fine-tuning to guide prompts to the adequate knowledge and data source. Importantly, KPMG audit teams are the ‘captains’ controlling and guiding the process and reviewing the results for quality and accuracy. And they are leading the continuous ‘training’ of the AI through their subject matter accounting, auditing, and industry expertise.

Recognizing the enormous possibilities offered by AI, KPMG invested in an expanded multibillion dollar alliance with Microsoft focusing on generative AI and cloud services giving KPMG firms access to new technology and industry-leading innovation.

As a global network of firms, KPMG can harness the innovations in AI from teams around the world. This means the entire KPMG network can benefit from the latest innovations, wherever they are made.

Already, there are a host of AI tools in use across the network, including tools relating to predictive analytics, content search and summarization, document intelligence and tie-out procedures.   I believe this is going to become a golden age of innovation, and exciting times for KPMG audit teams serving clients.

The journey ahead is incredibly exciting and is set to be transformational for KPMG professionals, KPMG firms’ clients and their stakeholders. No one can know quite how far and how fast AI will develop in the coming years – but it is certainly going to take us to some new places, in audit as in other professions and branches of business. The next generation of audit is fast becoming a reality, and KPMG is proud to be at the forefront of making it happen.

¹kpmg-ai-in-audit-survey-findings-executive-summary.pdf