Audit Finds Major Accounting Firms Lack AI Oversight
An independent audit, costing AUD 439,000 ($290,000), has been conducted to examine issues in the social security system related to automatic penalties for benefit applicants. The UK's Financial Reporting Council (FRC) found that major accounting firms do not track the impact of AI and automated tools on audit quality.
The audit, commissioned by an independent body, aimed to address concerns about automatic penalties in the social security system. The final report, however, contained inaccuracies, including references to non-existent scientific publications from Sydney and Lund universities. These errors were later corrected, with no changes to the findings or recommendations.
Meanwhile, the FRC investigated the 'Big Four' accounting firms - Deloitte, PwC, EY, and KPMG - regarding the use of AI and automated tools in audits. The investigation revealed that these firms do not track the impact of these tools on audit quality. Deloitte admitted to using generative artificial intelligence (GPT-4 from OpenAI) to generate some text in the audit report.
The independent audit, despite initial inaccuracies, provided valuable insights into the social security system. The FRC's findings highlight the need for major accounting firms to monitor the impact of AI and automated tools on audit quality. Deloitte's use of AI in generating report text raises questions about transparency and accountability in the auditing process.
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