Exploring the incorporation of artificial intelligence in financial auditing and fraud detection of auditors from selected medium-sized accounting firms in Metro Manila
Janice C. De Luna, Raven Andrea G. Galicia, Tracey Kim N. Murillo, Jericho D. Rembulat, Mary Angeline P. Sangdaan, C. Tessie, Araceli J. Angeles · 2024
Given the increasing complexity of financial transactions and flourishing cases of accounting frauds, the traditional methods of auditing are facing significant challenges in ensuring accuracy and efficiency. This research study aimed to assess the incorporation of Artificial Intelligence (AI) in enhancing the auditing process and fraud detection mechanisms by auditors from selected medium-sized accounting firms in Metro Manila. Through descriptive qualitative research method, the research study evaluated the effectiveness, challenges, and opportunities presented by the adoption of AI technologies. The findings revealed AI incorporation has helped these accounting firms in Metro Manila in complying with the Philippine Standards on Auditing (PSA) and generally accepted accounting principles (GAAP). In addition, it significantly enhances the precision of financial data and facilitates better-informed decision-making processes. AI is also revolutionizing the auditing landscape by automating mundane tasks, reducing stress, and expediting assessments, leading to higher job productivity, better audit quality, and more emphasis on critical thinking. The efficiency and accuracy of audit task results through AI incorporation enables auditors to identify irregular patterns and potential frauds that would be difficult to detect through conventional methods. However, the study also highlights several challenges, including concerns around bias in AI that highlight how crucial transparency and validation procedures are, in maintaining the accuracy of analysis. Despite these challenges, the overall sentiment among the firms studied is optimistic, with many recognizing the potential of AI to revolutionize financial auditing and fraud detection. The study recommended accounting firms to slowly adopt AI technologies by implementing a support initiative. This includes outlining specialized training programs that aim to bolster the AI literacy of auditors, thereby optimizing the benefits of AI in financial audit and fraud detection practices.