Abstract
How does artificial intelligence (AI) impact audit quality and efficiency? We explore this question by leveraging a unique dataset of more than 310,000 detailed individual resumes for the 36 largest audit firms to identify audit firms’ employment of AI workers. We provide a first look into the AI workforce within the auditing sector. AI workers tend to be male and relatively young and hold mostly but not exclusively technical degrees. Importantly, AI is a centralized function within the firm, with workers concentrating in a handful of teams and geographic locations. Our results show that investing in AI helps improve audit quality, reduces fees, and ultimately displaces human auditors, although the effect on labor takes several years to materialize. Specifically, a one-standard-deviation change in recent AI investments is associated with a 5.0% reduction in the likelihood of an audit restatement, a 0.9% drop in audit fees, and a reduction in the number of accounting employees that reaches 3.6% after three years and 7.1% after four years. Our empirical analyses are supported by in-depth interviews with 17 audit partners representing the eight largest U.S. public accounting firms, which show that (1) AI is developed centrally; (2) AI is widely used in audit; and (3) the primary goal for using AI in audit is improved quality, followed by efficiency.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.