AI and the audit: AICPA publishes practice aid to assist auditors

The AICPA issued a practice aid Tuesday that provides a framework to help auditors understand how artificial intelligence affects financial statement audits.

Artificial Intelligence (AI) Considerations for Financial Statement Auditors covers the impact of organizations’ use of AI in financial reporting and the impact of audit firms’ use of AI in audit engagements. 

The guidance, according to a news release, will aid CPAs in evaluating AI-related risks, in understanding how AI may affect controls, and in determining appropriate audit responses and use of AI tools when performing the audit.

“AI tools are already benefiting the efficiency and effectiveness of both financial statement preparation and the audit in a number of ways,” Amy Pawlicki, the AICPA’s vice president–Assurance & Advisory Innovation, said in the release. “But as powerful as they are, these tools can introduce new risks that auditors must be cognizant of in fulfilling the critical role they play in performing financial statement audits. This practice aid is intended to help auditors understand and mitigate these risks in a rapidly evolving environment.”

The news release details topics covered in each part of the practice aid. The first section covers how an organization’s use of AI in financial reporting affects the financial statement audit. The second section covers audit firms’ use of AI-related technological resources in the performance of their audit engagements.

The second section provides “practical guidance to auditors when using AI, including considerations for quality management, appropriate supervision and review, and continued attention to professional judgment and professional skepticism,” said Jennifer Burns, CPA, the AICPA’s chief auditor. “Ultimately, the auditor remains responsible for the audit and the audit opinion.” 

More guidance will be added in the future, according to the news release, including a focus on the assessment of the risk of material misstatement and the evaluation of audit evidence when a company is using AI.

In addition to the practice aid, the AICPA issued two AI-related resources of note earlier this year: 

• Guidance on the effect that service organizations’ use of AI may have on SOC 1 and SOC 2 engagements. 
• A staff insights article, “AI through an ethics lens,” available in the AICPA’s online ethics library.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.