Advanced Auditing - week 6

Austin et, al 2021 - Socio-technical systems theory

Analytics evolves because of working together.

• technology,

• regulation,

• auditors,

• and clients

==> co-evolution

Main findings:

Shared analytics journey & tensions & shift to advisory role

Auditors and clients learn together:

• auditors introduce analytics;

• clients imitate/adapt.

Analytics therefore reshape:

• workflows,

• relationships,

• and expectations.

Fedyk, 2022 - is AI improving the audit process

Improves and reshapes the audit profession

1. Better AQ

2. Greater efficiency

3. Labor substitution

4. Productivity increase

Tensions around analytics

Sharing tensions

Fee tensions

Regulation tensions

What is AI used for? - Commerford

1. Impairments, loan loss provisions, fair value and complex estimates

Algorithm aversion - Commerford

People trust AI less than people even if the quality is just as good or better.

AI may improve skeptical judgment (detection) but not action

Samiolo, et al 2025 - automation and PS

In regards to junior auditors:

Short term automation efficiency causes long term capability losses

For: the tasks give you experience and show you how it works in the basis ==> PS

Against: more focus on higher level analysis

AI benefits

1. Anomaly detection

2. Fewer restatements

3. Efficiency gains

4. Higher productivity

AI risks

1. Weaken PS

2. Algorithm aversion

3. Long term skill erosion

4. Blurred independence boundaries

5. Regulatory uncertainty