Al Naqvi - Artificial Intelligence for Audit, Forensic Accounting, and Valuation: A Strategic Perspective

1. Chapter 7
2. Chapter 8
3. Chapter 15

1. Chapter 1
2. Chapter 2
3. Chapter 3
4. Chapter 4
5. Chapter 5
6. Chapter 6
7. Chapter 7
8. Chapter 8
9. Chapter 9
10. Chapter 10
11. Chapter 11
    1. FIGURE 11.1 The Audit Automation
12. Chapter 12
13. Chapter 14
14. Chapter 15
15. Chapter 17
16. Chapter 18

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AL NAQVI

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Library of Congress CataloginginPublication Data

Names: Naqvi, Ali S., 1968 author.

Title: Artificial intelligence for audit, forensic accounting, and valuation : a strategic perspective / Ali S. Naqvi.

Description: First edition. | Hoboken : Wiley, 2020. | Includes index.

Identifiers: LCCN 2020021960 (print) | LCCN 2020021961 (ebook) | ISBN 9781119601883 (cloth) | ISBN 9781119601913 (adobe pdf) | ISBN 9781119601937 (epub)

Subjects: LCSH: AuditingData processing. | Forensic accounting. | Valuation. | Artificial intelligence.

Classification: LCC HF5667.12 .N37 2020 (print) | LCC HF5667.12 (ebook) | DDC 658.0285/63dc23

LC record available at https://lccn.loc.gov/2020021960

LC ebook record available at https://lccn.loc.gov/2020021961

Cover Design: Wiley

Cover Image: Dragon Nipitpon Singad/EyeEm/Getty Images

Dedicated to
My father, D. H. Naqvi (19352018) the very first accountant/auditor in my life

AUDITORS AND ASSURANCE PROFESSIONALS: Do you know how to build a comprehensive plan to achieve intelligent automation of your audit function? More importantly, at personal and professional levels, are you ready for the greatest transformation in the human history?

An artificial intelligence revolution is sweeping through the world. Auditors and forensic accountants in firms of all sizes and types are trying to understand what it means for them. Many want to explore how to build plans for total intelligent automation to move their companies forward into the new AI economy. Many have recognized the imminent need for augmenting skills because of increasing automation. The recognition that the AI economy will be led by business professionals is finally sinking in. But auditors, accountants, finance professionals, and forensic accountants must develop a deeper and more pragmatic understanding of the AI revolution. They must do it fast before the opportunity passes them by. This book will be your guide to improve and implement intelligent automation in your firms and to do it in a structured, efficient, and disciplined way.

Artificial intelligence and audit are not strangers to each other. For decades researchers and practitioners have been trying to marry the two. Audit, if automated, can improve the audit quality and reduce its cost. On one hand it will improve the audit efficiency for companies; on the other hand it will enhance the trust and confidence of investors and other stakeholders who rely upon audited financial statements.

While the research and reports on artificial intelligencecentric audit automation have been plenty, there has not been a structured model of endtoend audit automation. Sporadic collection of papers on audit does not translate into a workable audit model. Neither does haphazard capability building. In some ways, it was never deemed important to build a comprehensive framework from the perspective of how to build an audit automation plan for a company. After all, up until very recent times, the technology was not advanced enough to even begin to think about a fully automated audit. It was no different than the application of artificial intelligence in a car or an airplane. Automating some functional parts of a car's or an airplane's operation is one thing, creating an autonomous car or an autonomous drone another. But just as advances in technology have now given us the comfort to envision putting autonomous vehicles on the road and autonomous drones in the sky, the time for autonomous and continuous audit has come.

However, automating audit does not mean eliminating human work. If anything, it means eliminating the mistakes and errors, whether intentional or not, of the human work. Thus, a structured model of intelligent automation of audit will incorporate the automation of both cognitive and physical human work and will focus on enhancing the human ability to function far beyond what normal human capacities allow humans to do. Lifting the human constraints is not simply a function of enhanced computational efficiency. It results from embedding intelligence in machines.