audit ai Flashcards
What is the main research question of the paper?
How does artificial intelligence (AI) affect audit quality, efficiency, and workforce composition?
What data source does the study use?
Cognism resume dataset with 310,000+ profiles from 36 U.S. audit firms (2010–2019).
What are the three core predictions tested in the paper?
- AI improves audit quality. 2. AI improves audit efficiency. 3. AI reduces audit workforce, especially junior employees.
What are audit restatements used to measure?
Audit quality.
How much does a one-standard-deviation increase in AI investment reduce audit restatements?
5.0% reduction.
How much do audit fees drop after three years of increased AI investment?
2.1% decrease.
Which employee group is most affected by AI-related labor displacement?
Junior-level employees.
What is the percentage reduction in junior staff after four years of increased AI investment?
11.8% reduction.
What distinguishes AI from traditional audit data analytics (ADA)?
AI can model non-linear patterns, process unstructured data, and make autonomous decisions.
Why is auditing considered an ideal industry to study AI’s impact?
It has a standardized product, high data volume, and tasks suited for AI like fraud detection.
What qualitative method supplements the resume data in the study?
Interviews with 17 audit partners and tech leaders from Big 4 and mid-tier firms.
What are some AI applications mentioned in the interviews?
Anomaly detection, fraud prevention, revenue analysis, OCR, risk assessment, AML/KYC.
How do firms implement AI according to interviews?
Centralized development, top-down implementation, with both in-house and third-party tools.
What is the biggest barrier to AI adoption noted by audit firms?
Lack of trained human capital.
What do clients expect from auditors regarding AI?
They expect auditors to use AI and also expect lower fees.
What empirical method does the paper use to measure AI investment?
Tracking AI-related terms in employee resumes (AI Human Capital measure).
What kind of firms are included in the sample?
The 36 largest U.S. audit firms, both Big 4 and mid-tier, with 100+ employees.
How do fees per employee change with AI adoption?
They increase, indicating higher productivity.
How does client AI adoption affect audit quality?
It does not significantly affect audit quality—only auditor-side AI matters.
What regulatory concern is raised in the interviews?
Lack of clear formal standards; normative guidance exists.
