Auditing in the Age of AI
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This document summarizes a presentation on auditing in the age of artificial intelligence. It discusses how AI can help address the global problem of fraud by enabling continuous monitoring of large datasets. It also explores how major accounting firms like EY and Deloitte are using AI to improve audit quality, predict risks, process tax returns and conduct other tasks. The UAE's national AI strategy aims to boost the economy and government performance through AI. Challenges to organizational AI adoption include lack of expertise, high costs and convincing stakeholders of its value.
Auditing in the Age of AI
- 1. Dr. Saeed K Aldhaheri Chairman of the Board, Smartworld @DDSaeed Auditing in the Age of AI 7th CAE Conference, 12 – 13 Dec 2017, Dubai, UAE
- 2. Interest in AI and disruptive technologies
- 3. machines can hear machines can see machines can talk machines can learn What does that means! And what impact will it have on the audit job?
- 4. Audit in the Age of AI • The Fraud problem: some figures and statistics • What is AI, Why it is important and Why Now? • Consumerization of AI • Where AI is applied today, how it is impacting Jobs, and what skills are needed to survive the 4IR • How AI can benefit audit: Some examples • Highlight the UAE AI Strategy and how government is innovating using AI • Challenges facing Enterprises to use AI and how to resolve them What to expect
- 5. Fraud is a global problem • $1trillion is paid each year in bribery globally, and $2.6 trillion is lost to corruption, (5% of the global GDP). PwC report 2017 • More than one in three (36%) organisations experienced economic crime- PwC report • Only 50% of respondents globally are using specialist monitoring software to identify fraud risks. EY global fraud survey 2016 Can AI help to control fraud? Source: Five forces that will reshape the global landscape of anti-bribery and anti-corruption. PwC 2017
- 6. AI Market Size • IDC estimated the AI market will grow from $8 billion in 2016 to more $47 billion by 2020 • Forrester Research predicted a greater than 300% increase in investment in AI in 2017 compared to 2016
- 7. AI Adopting in the Enterprise on the Rise • In 2016 38% or orgs use AI tech., and is expected to rise to 62% by 2018. Narrative science survey • 56% those who haven’t deployed AI plan to do so in the next two years. Narrative science survey • by 2019, deep learning will be a critical driver for best-in- class performance for demand, fraud and failure predictions. Gartner predictions
- 8. AI is a key driver for the 4IR
- 9. AI Is the new Electricity • AI as a service – AIaaS • Google, Microsoft, Facebook, Amazon, IBM,,,etc
- 10. What is Artificial Intelligence (AI) Source: David Kelner, The fourth industrial revolution: a primer on Artificial Intelligence (AI)AI: developing computer systems that exhibit intelligent Behavior, similar to human being Machine Learning: teaching computers to learn without explicit Programming • the goal: to develop a prediction engine for a specific use case • quality of predictions improve with experience Deep Learning: model the brain, not the world • Approximate the function of neurons in the brain • uses artificial neural networks with many layers AI echo system
- 11. Why AI & Why Now? • Solving complex problems difficult for traditional computing methods • Pattern recognition and image classifications • complex predictions • Translation between languages • general intelligence • Why now? • Increase in computing power (more’s law) and the effect of the cload • BiG Data • enahnced algorithms (ML, DL,,etc)
- 12. Consumerization of AI Huawei mate iPhone X Google Assistant Amazon echo look Amazon echo dot fitbits Samsung Bixby Google Lens
- 13. AI & Robots in Automation More than 80,000 robots Worldwide handling millions of orders each day
- 14. Some of AI Applications
- 15. Computers still terrible at understanding the world
- 16. Promise of AI for Internal Audit • Improving quality of Audit • Frequency of Audit • Entire population of data instead of a random sample • Avoiding misstatement • Faster audit • Ability for Real-time fraud monitoring and detection • Deep learning focused on finding anomalies AI will help auditors to become more efficient, therefore increasing productivity and helping their organization to meet their goals How to embrace digital innovation where we need to exercise a strategy that embraces risk taking, which is conflicting to that of audit practitioners task of managing and mitigating risks.
- 17. Future of Jobs and The skills needed in the Future • Polarized views: opportunities for new job categories vs. massive labor substitution and displacement of jobs • Momentous change is underway, and our actions today will determine: massive displacement of workers or emergence of new opportunities • New jobs: data scientists, IoT architect, What skills auditors need?
- 18. The BiG 4 are Embracing AI for Innovation
- 19. EY uses of AI • Fraud monitoring and detection: • Use ML for anomaly detection to identify fraudulent invoices for clients • Extremely useful for large invoice volume processing • Valuable for detecting fraudulent invoices that involves international parties • has 97% accuracy, and more than 50 clients • Predicting future risks • DL used to learn from 7 years of financial statements • Review and analyze historical data and make predictions of likely future risks
- 20. EY uses of AI • Lease accounting (a pilot program) • With AI it is possible to review 70%-80% of a simple lease’s contents electronically • 40% review for complex leases (e.g., real-estate) • More complex contracts can be read and analyzed with improvement in machine learning • Interacting with the world • Still at an early stage • Uses voice recognition to interact with chat bots (virtual digital assistant) • Providing smarter access in real time to technical questions, e.g, audit regulation for a specific country. • A potential to transform the way AI can be used to improve corporate performance • Drones enabled with AI for inventory observations • Pilot project to improve the accuracy and frequency of inventory stock count
- 21. Deloitte uses of AI • Evaluating potential procurement synergies during M&A • Deloitte has built classification engine using deep learning • Shorten evaluation time from 4-5 months to a week • Bringing greater values to clients • Producing Tax reports using Natural Language Generation (NLG) • Deloitte processes more than 50,000 tax returns annually for clients • Creation of text to produce reports • detailed narrative report of individual tax returns • Tax professionals rely on these reports to provide more targeted financial advice to clients
- 22. “The UAE Centennial 2071 begins now, with the launch of massive projects such as the AI strategy to set up the basis for the coming phase”,,,, “We are striving to adopt all tools and AI technologies that will boost government performance on all levels”,,,, “The next phase requires Emiratis specialised in AI to serve our supreme national interests as the implementation of AI technologies will help develop new sectors and create various opportunities for our national economy”. UAE AI Strategy H.H. Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai
- 23. UAE AI Strategy Vision: To boost government performance, the rate of accomplishing achievements. KPIs for 2031 • 30% boost of UAE GDP • 50% saving on annual cost to government • 90% resistance of financial crises • 100% use of AI in services and gov data analytics What does this implies to AI vendors, consulting firms and professionals?
- 24. Innovating Gov Services using AI: Examples
- 25. UAE International awards • UAE Drones for Good Award: 2015 • UAE Robotics & AI for Good Award: 2016 • Mohammed Bin Zayed International Robotics Challenge: 2017
- 26. Challenges facing organizations to use AI • No clear picture of how AI can add value • Shortage of Expertise • The need for infrastructure and data management platform • High cost of technology • convincing stakeholders about AI’s validity
- 27. “Our best bet at this period of time where we have wealth is to invest all our resources in education, because there will be a time, 50 years from now, when we load the last barrel of oil aboard the ship. The question is, are we going to feel sad? If our investment today is right, I think - dear brothers and sisters - we will celebrate that moment” H.H. Sheikh Mohammed Bin Zayed Al Nahyan Crown Prince of Abu Dhabi