EGYPT: Transition from Traditional Auditing to Digital Auditing using Artificial Intelligence: Benefits and Challenges

The business environment has experienced significant technological advancements, particularly in the field of auditing which plays a crucial role in providing decision-makers with key information.

Developments have required auditors to acquire new skills to utilize new technologies effectively. One major development is the embedding of artificial intelligence (AI) into auditing, leading to the emergence of the concept of digital auditing. This shift entails both challenges and opportunities, raising important questions about how AI applications influence the auditing profession.

The concept of Artificial Intelligence

AI lacks a single, definitive definition, but it could be described as an experimental branch of Computer Science that focuses on creating smart devices capable of performing sophisticated tasks. In the field of auditing, AI involves using advanced computing techniques, such as machine learning used to automatically analyse and evaluate texts and contents, providing precise support for auditing processes.

AI Tools Used in Auditing

Machine learning is expected to revolutionize the auditing profession, enabling auditors to eliminate the traditional trade-off between speed and quality. Machine learning algorithms also provide the capability to analyse entire data sets, which enhances auditing integrity.   

Expected Benefits of Using Artificial Intelligence in Auditing

1. Automation of Audit Tasks: AI can automate many routine audit tasks, such as data collection, risk assessment, and reporting, which could reduce the time and effort required for conducting audits.
2. Big Data Processing: AI could analyse large volumes of data more efficiently and accurately than humans, improving the accuracy and reliability of audit results and verifying all financial transactions.
3. Enhanced Fraud Detection: AI could help identify potentially fraudulent activity by analysing data for patterns that indicate fraudulent behaviour.
4. Risk Assessment: AI could assist auditors in identifying and assessing risks more effectively by analysing large amounts of data and determining patterns that might be difficult for humans to detect.

Expected Challenges of Using Artificial Intelligence in Auditing

1. Need for New Skills: Auditors will need to develop new skills to handle artificial intelligence systems, such as data analytics skills.
2. Continuous Updating: There is a continuous need to update smart patterns to remain capable of dealing with changes in semantics and pragmatics.
3. Ethical Challenges: Auditing using artificial intelligence raises ethical concerns regarding decision-making responsibility and the bias possibility.
4. Data Reliability: AI systems depend on the input data quality . Inaccurate or incomplete data could produce erroneous results, potentially misleading auditors and obstructing their work.

High Cost: Implementation costs of artificial intelligence are very high, in addition to the complexity of its maintenance.  

A SWOT analysis could identify key Strengths, Weaknesses, Opportunities, and Threats related to the impact of using artificial intelligence in the auditing process.

Generally, AI has the ability to significantly transform auditing by automating routine tasks, enhancing data analysis, improving fraud detection, and develop skills' requirements. However, AI could not fully replace human judgment and expertise; auditors will still be essential for interpreting and reporting audit results.