Artificial Intelligence for Audit, Forensic Accounting, and Valuation

CHAPTER 11Reporting and Post‐Audit Management

WE WILL CLOSE THE AUDIT AUTOMATION part with a brief discussion on audit opinion detection and prediction and then a deeper coverage of post‐audit value management (Figure 11.1). When auditors obtain and test their evidence, the last step of the traditional audit is to issue an opinion. This opinion summarizes the findings related to the likelihood of a material misstatement in the financial statements. The opinion issued typically depends upon several factors and includes the results of activities related to the internal controls and substantive testing. Even when the audit opinion is clean (unqualified), critical audit matters and information about the audit team might be disclosed. Critical audit matters may include areas where auditors had to use subjective or complex judgment in areas of accounts or disclosures that are material to the company (AS 3101).

Some of the key questions to consider are:

• Is it possible to predict what the audit opinion should/could be without even going through the entire evidence collection process?
• If yes, what are some ways in which we can use artificial intelligence (AI) to do that?
• Can that information help in adjusting the audit plan?

AUDIT OPINION DETECTION

Being able to determine if an audit opinion was qualified (adverse opinion) or unqualified from the historical financial and other data is a powerful predictor for forecasting future opinions. Opinion detection is an ongoing area of research. ...