The Audit Committee Institute has issued a cautionary advisory to auditors and accountants regarding the adoption and reliance on Artificial Intelligence as a tool in business and audit processes.
The institute’s Chairman, Chris Ekeigwe, stressed this message in a release titled ‘Audit Perspective on Artificial Intelligence – transitioning from trust but verify to verify and verify.’
Ekeigwe underscored the potential risks of auditors and accountants placing complete trust in AI during the audit process, believing it capable of producing flawless financial reports.
He emphasized that such blind faith could have detrimental consequences for the corporate world.
Drawing a historical parallel, Ekeigwe recalled the early days of personal computers when professionals were misled into thinking computers were infallible.
This misplaced belief led to overconfidence and a heavy reliance on computer-generated reports, resulting in auditors failing to detect errors and fraud promptly.
This, in turn, contributed to the collapse of several companies between the 1980s and 2000s, including Barings Bank, Bank of Credit and Commerce International, Wells Fargo, Enron, and WorldCom.
Ekeigwe cautioned against repeating such a scenario, especially given the substantial power of AI today.
He warned that reverting to this mindset could have even more catastrophic consequences.
In light of this, Ekeigwe urged accountants and auditors to exercise caution when encountering persuasive claims from the tech industry about AI’s infallibility and the need for trust.
He noted that modern society tends to excessively prioritize technology at the expense of critical thinking, attributing undue authority to it.
Ekeigwe stated, “I observe this trend happening again today with the tech industry’s enthusiastic messaging that we should place our trust in AI, despite mounting evidence that AI lacks the necessary reliability to warrant unquestioning faith.”
Recognizing the potential dangers associated with AI, Ekeigwe emphasized that the principle of “verify and verify” carries profound significance in an AI environment.
He asserted that this approach has a direct impact on the future effectiveness of controls, audit outcomes, and the overall stability of an entity’s operations.
Ekeigwe advocated for a shift in the audit paradigm from “trust but verify” to “verify and verify,” reflecting the necessity of thorough and continuous scrutiny in an AI-driven landscape.
