Auditors' Perception on the Impact of Artificial Intelligence on Professional Skepticism and Judgment in Oman

Gopalan Puthukulam,Anitha Ravikumar,Krishna Murthy Meesaala,Ravi Vinod Kumar Sharma

doi:10.13189/ujaf.2021.090527

Abstract

Technology is an inevitable part of businesses and human lives. It has brought about substantial changes in the way businesses and operations are conducted. A business organization has to perform auditing which involves analyzing and testing a large volume of financial transactions. In manual auditing, testing and analyzing the entire transactions in a business are not possible. The usage of artificial intelligence (AI) and Machine Learning (ML) not only allows testing the entire financial transactions in a business but also helps improve audit efficiency. Audit efficiency relates to the professional skepticism and professional judgment demonstrated by the auditors. The core purpose of the research is to understand the perception of auditors on the impact of such technologies on professional skepticism and the judgment of internal auditors in improving audit efficiency. To understand the impact of AI and ML, various factors influencing the use of AI and ML and the challenges were considered. Data were collected from 169 respondents spanning across all sectors in Oman using a structured questionnaire. The collected data were analyzed using correlation to determine the relationship between AI and ML-assisted auditing practices and professional skepticism and professional judgment. Results indicate that AI and ML-assisted auditing practices have a strong positive relationship with professional skepticism and professional judgment. This proves that AI and ML have an impact on professional skepticism and professional judgment. Moreover, it helps in improving the detection of errors and material misstatements. Even though the advantages of AI and ML outweigh manual auditing, the complete replacement of human beings with AI and ML should be considered with caution. Hence, auditing must be carried out with the help of AI and ML along with human intervention in improving auditing efficiency.

Highlights

Professional skepticism refers to “an attitude that includes a questioning mind and a critical assessment of audit evidence”
Professional skepticism is considered as an essential part of audit quality [18]
Out of 169 internal auditors responded to the questionnaire, 112 of whom were male and 57 were female. respondents have less than 4 years of experience and respondents have more than 4 years but less than 8 years of experience. 28 respondents have more than 8 years but less than 13 years of experience, 24 respondents have more than 13 years but less than 18 years and only 18 respondents have more than 18 years of experience as internal auditors

Summary

Introduction

Professional skepticism refers to “an attitude that includes a questioning mind and a critical assessment of audit evidence”. This means that auditors who demonstrate a high level of professional skepticism are auditors who need evidence that is more convincing relatively in terms of quality and quantity. Professional skepticism is considered as an essential part of audit quality [18]. Professional judgment is described as the key to a successful audit engagement. Correct usage of professional judgment means they must understand the rules and standards related to accounting and audit. ISA 200 emphasizes the importance of exercising professional

Objectives

Results

Conclusion