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How Artificial Intelligence Is Changing Financial Auditing

If companies and businesses want to ensure future success, it is imperative to accept and embrace the capabilities provided by robots. Artificial intelligence won’t always be perfect, but it can dramatically improve your work output and add to your bottom line. It’s important to emphasize that the goal is not to curtail employees but to find ways to leverage the robots to automate everyday tasks or detail-oriented processes and focus the employees on higher-value activities.

How Artificial Intelligence Is Changing Financial Auditing

As robots continue to play a growing role in our daily lives, white collar jobs in many sectors including accounting and financial operations are quickly becoming a thing of the past. Businesses are gravitating towards software to automate bookkeeping tasks, saving considerable amounts of both time and money. In fact, since 2004, the number of full-time finance employees at large companies has declined a staggering 40% to roughly 71 employees for every $1 billion of revenue, from 119 employees, according to a report by top consulting firm The Hackett Group.

These numbers show that instead of resisting change, companies are embracing the efficiencies of this new technology and exploring how individual businesses can leverage automation and, more importantly, artificial intelligence, aka robots. A quick aside on the idea of robots versus automation; As technology becomes more sophisticated, and particularly, via the use of Artificial Intelligence (AI) we are able to automate multiple steps in a process. The concept of Robotic Process Automation (RPA), or robots for short, has emerged to capture the notion of the more sophisticated automation of everyday tasks.

Today, there is more data available than ever and computers are enhancing their capabilities to leverage these mountains of information. With that, many technology providers are focusing on making it as easy as possible for businesses to implement and utilize their solutions. Whether it’s by easing the support and management burden via Software as a Service (SaaS) delivery or more turn-key offerings that embed best practices in the solution, one can see a transformation from simply providing tools to providing a level of robotic automation that seems more like a service offering than a technology.

Of course, the name of the game for any business is speed, efficiency, and cost reduction. It is essential to embrace technologies that increase efficiency and savings because, like it or not, your competitors will. While there are some companies that stick with the old-school approaches, they end up serving small niches of customers and seeing less overall growth.

As long as the technology-based solution is less expensive and performs equally as well, if not better than alternative options, the market forces will drive companies to implement the automated technologies. In particular, the impact of robotic artificial intelligence (AI) is here to stay. In the modern work environment, automation means much more than just compiling numbers but making intelligent observations and judgments based on the data that is reviewed.

If companies and businesses want to ensure future success, it’s imperative to accept and embrace the capabilities provided by robots. Artificial intelligence won’t always be perfect but it can dramatically improve your work output and add to your bottom line. It’s important to emphasize that the goal is not to curtail employees but to find ways to leverage the robots to automate everyday tasks or detail-oriented processes and focus the employees on higher-value activities.

Lets use an example: controlling spent in Travel & Expense (T&E) by auditing expense reports. When performing an audit, many companies randomly sample roughly 20% of expense reports to identify potential waste and fraud. If you process 500 expense reports in a month then 100 of those reports would be audited. The problem is less than 1% of these expense reports contain fraud or serious risks (cite SAR report), meaning the odds are that 99% of the reports reviewed were a waste of time and resources and the primary abuser of company funds most likely went unnoticed.

By employing a robot to identify risky looking expense reports and configuring the system to be hyper-vigilant, it has been shown that a sufficiently sophisticated AI system will flag 7% of the expense reports for fraud, waste, and misuse (7% is the average Oversight Systems have seen across 20 million expense reports). If we look back to our previous example this means that out of 500 expense reports, employees would only have to review 35 instead of the 100 reports that would have been audited. Though these are likely not all fraudulent, they may provide other valuable information such as noting when an employee needs to be reminded about company travel policy.

While it may sound like robots are eliminating human jobs, it’s important to note that they can also be extremely valuable working collaboratively with employees. Although the example above focused on fraud, the same productivity leverage is available regarding errors, waste, misuse in financial processes, etc. With the help of robots, we can spend less time hunting for issues and more time addressing them. By working together with technology, the employee has a higher chance of rooting out fraud and will have the bandwidth to work with company travelers to influence their future behavior.

It is clear that in order to ensure future profitability it is crucial for businesses to understand and take advantage of the significant role that robots can play in dramatically enhancing financial operations.

Sourced from: http://dailycaller.com/2017/03/09/how-artificial-intelligence-is-changing-financial-auditing