How EY views the risks and opportunities associated with Artificial Intelligence?
Developments in AI technology are unlocking transformative new ways of working with advances in computer processing power, the release of new AI learning models, and the increased accessibility of ‘off-the-shelf’ AI capabilities creating risks and opportunities for corporates, discusses Paul Goodhew, EY Global Assurance Innovation & Emerging Technology Leader.
Accompanying this wave of development has been an intense level of stakeholder interest and scrutiny, as governments, regulators, companies, and individuals look to understand the potential wide-ranging impacts of AI on society.
For the audit profession, advances in AI are facilitating new technology use cases to enable high quality audits and to enhance the experience for audit professionals and the companies they serve. As organisations develop and implement AI, this also creates new expectations and demands of the auditor in addressing the risks associated with AI technology, against a background of significant public interest and discourse.
Paul Goodhew, EY Global Assurance Innovation & Emerging Technology Leader
How is EY leveraging AI to enable high quality audits?
In recent years, EY has been developing, testing, and deploying the use of AI capabilities.
This research and development activity is now being supported through EY’s recently announced $1bn investment in a next generation integrated assurance technology platform. This investment is facilitating the integration of existing assurance technology and driving new technology transformation in three major areas: data access capabilities and advanced analytics; artificial intelligence; and the user experience.
Through this technology investment, EY has identified a range of usage patterns to enable audit teams to harness the power of AI. Examples of these usage patterns include: the development of smarter digital workflows to provide relevant recommendations on complex decisions; outlier and anomaly detection to support audit teams in asking more targeted questions; and enhanced information gathering to help EY professionals in managing and understanding large volumes of unstructured data.
The right data foundations are vital to the success of any organisation when it comes to developing AI enabled technology. EY benefits from the strength of EY Canvas, which connects over 500,000 EY professionals and external users from the companies that EY teams serve. EY Canvas is the secure and cloud-based workflow, communication, and documentation hub, deployed globally to support the delivery of over 150,000 EY audits. EY teams use EY Canvas to manage and document the activities undertaken to deliver EY’s digitally transformed audit. The power of one global audit methodology together with globally deployed technology provides for robust and rich data foundations.
The first 12 months of EY’s multi-year technology investment programme has seen the introduction of over 20 new assurance technology capabilities, including the release of globally scaled AI. This AI-enabled capability. leveraging publicly available and EY generated data, is directly integrated with EY Canvas to support EY audit professionals in assessing risk.
EY has also developed strategic relationships with some of the world’s largest and most innovative technology companies, including the EY-Microsoft alliance. Cloud enabled technologies, such as Microsoft Azure, help power EY’s assurance technology, providing unprecedented performance and extensibility. EY teams can also access Microsoft AI capabilities, including Azure Cognitive Services, to integrate leading-edge AI into the audit process.
What’s on EY’s AI technology roadmap to enable EY’s audit and assurance services?
In 2023, EY is developing, testing, and piloting new AI-enabled capabilities to support audit professionals in delivering high quality audits together with enhanced service delivery. These include:
- New AI enabled capabilities to assist in the review of financial statements
- AI powered technology to support with the review of the authenticity of documents
- Generative AI capabilities to enable streamlined access to relevant audit and accounting knowledge
EY is introducing new AI-enabled capabilities to support with the review of financial statements. This technology helps EY teams to quickly verify the internal consistency of financial statements, an integral part of the audit. By focusing any required queries that EY audit teams need to raise, AI technology is helping to improve the overall experience of EY audit professionals as well as company finance and accounting teams, during some of the busiest periods of an audit.
EY teams review significant volumes of documents as part of the audit process – including contracts and invoices. One concern when reviewing these documents is whether they have been vulnerable to external manipulation prior to being received by the audit team. In response, EY teams are now piloting AI capabilities that help with the identification of documents that might have been tampered with or falsified. EY teams can also use AI capabilities to detect anomalies across company journal entries, which could also provide indicators of potential fraud.
EY is currently developing and testing the application of new AI capabilities to facilitate easier access to accounting and auditing content, such as audit methodology and the latest accounting standards, including non-financial related updates based on new ESG policies. This is anticipated to support EY professionals in quicky and easily accessing accurate information, including in summarised form.
For the successful development and implementation of any AI technologies, any organisation must have the right infrastructure in place, including the relevant governance, processes and testing required. This infrastructure is needed to address a broad range of considerations including: the risks associated with AI, to satisfy the requirements of any applicable risk management framework, and to address the needs of users related to the product interface. For EY, a robust global technology certification process has been established to help govern and manage the development and release of audit technology, including for any AI enabled capabilities.
How is EY addressing the potential impact of AI on audit professionals, and considering the risks of AI implemented by the companies that EY teams serve?
Within EY, it is anticipated that new advances in AI will increasingly augment the audit professional’s experience and help to enhance the attractiveness of the audit profession. AI will enable teams to focus on delivering high quality audits and will enable audit professionals to focus on the most prominent risks and complex judgment areas.
To support EY audit professionals in leveraging the power of AI enabled capabilities, new learning and development will be important to support audit professionals in understanding how AI technologies operate; how to interpret the outputs of AI enabled products; and how to assess the potential risks posed by AI that has been developed by companies that EY teams serve. Today, learning available for EY professionals includes EY Badges, a learning programme that helps EY professionals to earn digital badges for future-focused skills such as data visualisation, data science and AI. Over 37,000 Innovation related EY Badges have been issued already, including EY Badges focused on AI and Intelligent Automation domains.
Increasingly, the companies that EY teams serve are implementing powerful new AI capabilities, which can help with the automation of routine finance and accounting related tasks such as data entry, reconciliation, and reporting. Going forward, developments in AI, including new generative AI technologies such as OpenAI’s Chat-GPT and Microsoft 365 Co-pilot may fundamentally impact the business, operating and talent models of an organisation. These technologies have the potential to significantly impact finance and accounting functions, for example by helping enable rapid and up-to-the-minute analysis of a company’s financial performance.
Recent public discourse related to the development of AI technology has highlighted many risks including bias, transparency, inaccuracy, privacy, security, and a lack of ‘explainability’. Against this background of increased stakeholder interest and scrutiny, EY has internally announced the release of an AI Assurance Framework. This framework provides guidance to EY audit professionals as they address AI technology developed by their clients.
The EY Assurance AI Framework leverages on EY’s own internal experience of developing AI technology and supplements EY Global Audit Methodology. This framework provides guidance to EY professionals, highlighting the importance of considering how the use of AI applications fit within a company’s overall business strategy, and what types of management controls are expected to address the risk of material misstatement as it relates to AI.
Every organisation today should be considering the long-term implications of AI for its future business and operating model. As the pace of AI technology development accelerates, EY is already planning ahead to assess the future impacts of AI technologies, and to design responses for the types of scenarios that EY teams and the companies they serve may face in the future. Instilling confidence is an imperative in this rapidly changing environment, and the audit profession is positioned to serve organisations in addressing the risks of AI, as those organisations look to embrace the opportunities associated with advanced and emerging technologies.
As AI technology is transforming other industries, it is likely that the future of the audit profession will also be transformed by it. While AI presents risks to manage and challenges to overcome, it appears probable that it could act as a game-changing technology, delivering significant social and economic benefits to the world when implemented effectively and responsibly.
The views reflected in this article are the views of the author and do not necessarily reflect the views of global EY or its member firms.