Fourth Industrial Revolution: Internal Audit (I.A.) to Artificial Intelligence (A.I.)?

Updated: Jun 30, 2019

When you see a machine respond like humans do or a computer that can carry out the cognitive ability of human ingenuity, do you get scared? Does your imagination run wild that you’ll eventually see the Terminator knock down your door? #HastaLavistaBaby

Your fear may not be out-of-place as a study done at Oxford University in 2013 showed that 47% of all current jobs in the US will disappear in the next 10 years. Some of them being completely automated at least upgraded to a point where only a fraction of the workforce is needed and Internal Audit is one of them.

In 1951, when the first neural network of the first chess program was invented, the Artificial Intelligence (A.I.) pioneer Alan Turing said that machines would eventually “outstrip our feeble powers” and “take control.” Turing also said that a machine could eventually communicate well enough to convince a human evaluator that it, too, was human.

A.I. or A.I’s Machine Learning application will really outperform humans on repetitive and high volume tasks. An auditor may review 5,000 transactions in a year but a machine can do the same within minutes. We have no chance of competing with machines on frequent, high volume tasks.

But, here's the catch. It needs large volumes of past data to learn. AI has to consume a huge chunk of past data to be able to perform tasks like humans do. Data Scientists and Machine learners at “Kaggle” were able to build an AI that can diagnose a specific eye disease by just reviewing the picture of an eye. They even built an AI that can grade an essay the way your professor does. However, it took thousands, if not millions, of written essays and diagnosis reports for it to mimic the human cognitive ability.

That’s their fundamental limitation. AI wouldn’t know how to tackle a problem that they see for the first time and that’s what we, Internal Auditors, can exploit. Now ask yourself, how much of your Internal Audit work revolves around repetitive tasks? From validating documents, reviewing transactions and analyzing process gaps? Is your job at risks?


Our ranks may diminish and job opportunities may be harder to come by, and in order for us to survive, we need to make a shift on where IA’s role should be. We are normally viewed and is present in the Company’s “Third Line” of defense, and it’s time to be in the “First Line” or the “Second Line” by leveraging the current technology. But how?

One is by freeing your mind with the menial aspects of work. One step I took to make the shift, although maybe late, is by using an AI technology to perform Continuous Auditing that can run 24/7 audit analysis on all the retail stores in my audit universe and that move drastically reduced the time and effort spent to evaluate the transactions and controls. Gone are the days when Internal Audit can’t do a 100% review.


As Garry Kasparov, the former chess champion, said, “Only by relying on machines, then, can we demonstrate that we’re not.”


#IAtoAI #4IR #internalaudit #controls #akawnthink


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