TL;DR:
- KPMG is integrating AI into its audit platform through a partnership with MindBridge.
- The alliance aims to enhance audit quality, improve efficiency, and detect potential fraud cases.
- Human involvement remains integral, with an emphasis on human-machine interaction.
- Sebastian Stöckle, global head of audit innovation at KPMG, highlights the broader scope of AI beyond generative models.
- KPMG has been using AI for data preparation in audits, extracting unstructured data from sources like images.
- With MindBridge’s technology, KPMG can analyze anomalies and unusual behavior in a company’s general ledger.
- This shift allows auditors to focus on higher-risk areas and saves time for CFOs by avoiding routine discussions.
- Stöckle emphasizes the importance of human expertise and robust human-machine interaction.
- Despite advancements, audits will always require accountants, with AI augmenting their work rather than replacing it.
- The integration of AI enhances efficiency and risk assessment and underscores the importance of human judgment in audits.
Main AI News:
KPMG, a renowned global firm, has been at the forefront of integrating artificial intelligence (AI) into its operations for quite some time. In a recent interview with CFO Dive, Sebastian Stöckle, the global head of audit innovation for the Big Four firm, unveiled KPMG’s latest endeavor to enhance its audit platform using AI. This strategic move involves forging a deeper partnership with MindBridge, a technology firm based in Ottawa, Canada.
The alliance with MindBridge is set to revolutionize KPMG Clara, the firm’s existing digital audit platform, by incorporating advanced statistical analysis, machine learning, and rules-based analytics technologies. By leveraging these cutting-edge capabilities, KPMG aims to augment audit quality and improve efficiency while minimizing errors and detecting potential fraud cases. Stöckle emphasized that human involvement remains an integral part of the process, highlighting the importance of human-machine interaction.
The announcement of this alliance coincides with the growing buzz surrounding ChatGPT, an AI-driven natural language processing tool developed by OpenAI and supported by Microsoft. Despite receiving some criticism and skepticism about its potential impact on the digital transformation of businesses, ChatGPT has captured attention for its powerful capabilities. However, concerns have also been raised about the risks associated with job displacement and potential manipulations.
In the interview, Stöckle reassured that the focus of KPMG’s AI advancements lies in fortifying the audit process, bolstering its quality and efficiency, rather than replacing human auditors. The integration of AI technologies will work in tandem with human expertise, allowing auditors to leverage the advantages of AI while maintaining control. Stöckle emphasized, “It’s always with human-machine interaction. It’s never a ‘leave the machine alone’ type of scenario.“
With over 17 years of experience at KPMG, Stöckle has played a crucial role in auditing and advising clients on enterprise resource planning (ERP) systems and data analytics for audits. As the global head of audit analytics at KPMG, working under the leadership of Larry Bradley, Stöckle has been instrumental in driving the firm’s focus on developing innovative technologies such as analytics, automation, blockchain, and AI.
Stöckle further elaborated on KPMG’s history of embracing AI, stating, “At KPMG, we have been experimenting, developing, and deploying different levels of AI over the years for different purposes in audit, tax, and advisory.” This commitment to exploring AI’s potential demonstrates KPMG’s dedication to staying at the forefront of technological advancements to better serve its clients.
While generative AI models like ChatGPT are dominating public discussions around AI, Sebastian Stöckle, the global head of audit innovation at KPMG, sheds light on the broader scope of AI. He emphasizes that AI encompasses multiple levels and variants, ranging from machine learning to unsupervised machine learning and deep learning. Stöckle goes on to clarify that even the advanced language models making headlines are merely scratching the surface of what AI can achieve.
In the context of audits, KPMG has been utilizing AI at basic levels for years, particularly in what Stöckle refers to as “data preparation.” This technology enables the extraction of unstructured data, such as extracting relevant information from an image of a paper invoice, including the invoice number, amount, and date.
With the integration of MindBridge’s technology, KPMG takes AI implementation to the next level by focusing on analysis rather than just data preparation. For instance, KPMG can leverage advanced unsupervised machine learning techniques to identify anomalies and unusual behaviors within a company’s general ledger, a capability that was not previously feasible.
Stöckle provides an example of how AI can identify unexpected transactional behavior in revenue transactions, such as debiting or crediting an account that is typically not associated with such transactions. By comparing these unusual transactions to a more typical pattern, the machine can flag potentially risky or irregular activities.
This shift in the auditing process transforms it from a system that relies on a random sampling of transactions to identify issues to a more targeted approach that focuses on transactions that are more likely to require attention. This not only benefits the auditors but also saves valuable time for the CFOs of the audited companies, as routine issues can be avoided.
Stöckle emphasizes that this data-driven approach allows auditors to concentrate on areas of the audit that pose higher risks due to unexpected or unusual behavior. This shift in workload also transfers some of the repetitive audit tasks from the finance and accounting department to the IT department.
Despite these advancements, Stöckle firmly believes that audits will always require the expertise of accountants. He reassures that nobody at KPMG envisions a future where audits are performed without human involvement. Stöckle highlights the importance of maintaining a robust human-machine interaction, as the machine’s ability to automate certain tasks allows humans to focus on critical areas that carry higher risks.
The integration of AI into KPMG’s audit processes not only enhances efficiency and risk assessment but also underscores the importance of human judgment and expertise in conducting comprehensive and reliable audits.
Conlcusion:
KPMG’s integration of AI into its audit platform through its partnership with MindBridge underscores the growing importance of data analytics in the auditing industry. This development highlights how AI technologies can augment the work of human auditors, enhancing audit quality and efficiency while reducing the potential for errors and detecting potential fraud cases.
By leveraging the benefits of AI, companies like KPMG can improve their service offerings, enabling them to stay ahead of the competition in a constantly evolving market. Ultimately, this move will help organizations streamline their financial processes and gain deeper insights into their financial data.
