ARTIFICIAL INTELLIGENCE AND AUDIT PRACTICES IN REGISTERED AUDIT FIRMS IN LAGOS, NIGERIA

Download PDF

Authors

Joseph U. Madugba¹, Chinagorom Juliana Onuoha²,  Ofoegbu Rosemary Onyinyechi ³, Nnodim Eniwogho Ologhene⁴

^{1, 2 & 4} Department of Accountancy, 

Federal Polytechnic Nekede, Owerri, Imo State. 

³ Department of Accountancy, 

Alvan Ikoku Federal University of Education, Owerri, Imo State

Abstract

This study artificial intelligence and audit practices in registered audit firms in Lagos, Nigeria was carried out to examine the effect of machine learning, natural language processing, Robotic process on audit practices in registered audit firms in Lagos state, Nigeria. The quantitative research design was employed and data was sourced from five point Likert scale questionnaire distributed to 285 respondents made up of junior, senior and audit partners in registered audit firms in Lagos out of which only 155 was returned accounting for 54%. The descriptive statistics, normality test, multi-collinearity test were all carried out. Reliability test was conducted with the aid of Cronbach Alpha and regression was used to test the hypotheses of the study. A significant outcome indicated that two out of three variables were found to have a significant and positive relationship with audit practice in registered audit firms in Lagos state Nigeria. The study concluded that there is a positive and significant relationship between artificial intelligence and audit practices. Implying that application of artificial intelligence will improve efficiency and effectiveness of audit practices and recommended that audit firms should continue to engage artificial intelligence and train their staff on more effective ways of using them in audit practices. 

Keywords: artificial intelligence, audit practices, machine learning, Robotic process, Natural Language process.

References

Abdullah, A. A. H., & Almaqtari, F. A. (2024). The impact of artificial intelligence and Industry 4.0 on transforming accounting and auditing practices. Journal of Open Innovation: Technology, Market, and Complexity, 10(1), 100218. https://doi.org/10.1016/j.joitmc.2024.100218

Al-Sayyed, S. M., Al-Aroud, S. F., & Zayed, L. M. (2021). The effect of artificial intelligence technologies on audit evidence. Accounting, 281–288. https://doi.org/10.5267/j.ac.2020.12.003

Adeoye, I. O., Akintoye, R. I., Aguguom, T. A., & Olagunju, O. A. (2023). Artificial intelligence and audit quality: Implications for practicing accountants. Asian Economic and Financial Review, 13(11), 756–772. https://doi.org/10.55493/5002.v13i11.4861

Alles, M. G., Kogan, A., & Vasarhelyi, M. A. (2008). Putting Continuous Auditing Theory into Practice: Lessons from Two Pilot Implementations. Journal of Information Systems, 22(2), 195–214. https://doi.org/10.2308/jis.2008.22.2.195

Anderson, D., Law, K., & Shen, M. (2021). American Accounting Association’s Audit Midyear llMeeting.

Brown-Liburd, H., Issa, H., & Lombardi, D. (2015). Behavioral Implications of Big Data’s Impact on Audit Judgment and Decision Making and Future Research Directions. Accounting Horizons, 29(2), 451–468. https://doi.org/10.2308/acch-51023

Brynjolfsson, E., McAfee, A. (2014). The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. Thailand: W. W. Norton.

Dada, M. (2018). MANDATORY AUDITOR ROTATION, AUDITOR INDEPENDENCE, AUDIT FEES AND AUDIT QUALITY: A SURVEY OF SELECTED AUDIT FIRMS IN LAGOS STATE.

Dagunduro, M. E., Falana, G. A., Adewara, Y. M., & Busayo, T. O. (2023). Application of Artificial Intelligence and Audit Quality in Nigeria. Advances in Multidisciplinary and Scientific Research Journal Publication, 11(1), 39–56. https://doi.org/10.22624/aims/humanities/v11n1p4

Davis, F. (1989). Perceived Usefulness, Perceived Ease of Use, and User Acceptance of Information Technology IT Usefulness and Ease of Use IT  and Ease of Use Acceptance of Information Technology. 13(3), 319–340.

Deloitte. (2019). Evolving today with a vision for tomorrow 2019 Audit Quality Report Evolving today with a vision for tomorrow Contents.

Dimaggio, P., & Powell, W. (1983). The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. Source: American Sociological Review, 48(2), 147–160.

Du, X. (2024). Impact of Artificial Intelligence on Auditing and the Future of Human Workforce Replacement. Advances in Economics, Management and Political Sciences, 115(1), 112–119. https://doi.org/10.54254/2754-1169/115/2024bj0205

Fedyk, A., Hodson, J., Khimich, N., & Fedyk, T. (2022). Is artificial intelligence improving the audit process? Review of Accounting Studies, 27(3), 938–985. https://doi.org/10.1007/s11142-022-09697-x

Frey, C. B., & Osborne, M. A. (2017). The future of employment: How susceptible are jobs to computerisation? Technological Forecasting and Social Change, 114, 254–280. https://doi.org/10.1016/j.techfore.2016.08.019

Ganapathy, V. (2023). Shodh Sari-An International Multidisciplinary Journal @2023 International Council for Education Research and Training. 02, 328–343. https://doi.org/10.59231/SARI7643

Hussin, N. A. K. M., Bukhari, N. A. N. M., Hashim, N. H. A. N., Bahari, S. N. A. S., & Ali, M. M. (2024). The Impact of Artificial Intelligence on the Accounting Profession: A Concept Paper. Business Management and Strategy, 15(1), 34. https://doi.org/10.5296/bms.v15i1.21620

Issa, H., Sun, T., & Vasarhelyi, M. A. (2016). Research Ideas for Artificial Intelligence in Auditing: The Formalization of Audit and Workforce Supplementation. Journal of Emerging Technologies in Accounting, 13(2), 1–20. https://doi.org/10.2308/jeta-10511

Iwuanyanwu, A., Adaramodu, Okeleke, & Fakeyede, P. (2023). ANALYZING THE ROLE OF ARTIFICIAL INTELLIGENCE IN IT AUDIT: CURRENT PRACTICES AND FUTURE PROSPECTS of Artificial Intelligence (AI) into Information Technology (IT) audits, analyzing current practices, training requirements, and prospects. Computer Science & IT Research Journal, 4(2), 54–68. https://doi.org/10.51594/csitrj.v4i2.606

Karmańska, A. (n.d.). PRACE NAUKOWE UNIWERSYTETU EKONOMICZNEGO WE WROCŁAWIU. https://doi.org/10.15611/pn.2022.4.06

Kokina, J., & Davenport, T. H. (2017). The Emergence of Artificial Intelligence: How Automation is Changing Auditing. Journal of Emerging Technologies in Accounting, 14(1), 115–122. https://doi.org/10.2308/jeta-51730

KPMG. (2024). KPMG. Make the Difference. Financial reporting leaders’ AI expectations for their companies and external auditors.

Lazăr Pleşa, T., Popescu, C., & Pleşa, I. T. (2023). From Digitization to Artificial Intelligence in External Public Audit. Valahian Journal of Economic Studies, 14(1), 47–59. https://doi.org/10.2478/vjes-2023-0006

Leocádio, D., Malheiro, L., & Reis, J. (2024). Artificial Intelligence in Auditing: A Conceptual Framework for Auditing Practices. Administrative Sciences, 14(10), 238. https://doi.org/10.3390/admsci14100238

List of Auditors in Lagos, Nigeria – Finelib.com. (2024). Finelib.com. https://www.finelib.com/cities/lagos/business/financial-services/auditors/page-2

Moll, J., & Yigitbasioglu, O. (2019). The role of internet-related technologies in shaping the work of accountants: New directions for accounting research. The British Accounting Review, 51(6), 100833. https://doi.org/10.1016/j.bar.2019.04.002

Munoko, I., Brown-Liburd, H. L., & Vasarhelyi, M. (2020). The Ethical Implications of Using Artificial Intelligence in Auditing. Journal of Business Ethics, 167(2), 209–234. https://doi.org/10.1007/s10551-019-04407-1

Olojede, P., & Olayinka, E. (2022). Historical Perspective of Auditing and Professional Accounting Development in Nigeria. Journal of Accounting and Finance (IPJAF), 6(4), 16–37. https://doi.org/10.52962/ipjaf.2022.6.4.138

Oluwagbade, O. I., Boluwaji, O. D., Azeez, O. A., & Njengo, L. M. (2024). Challenges and Opportunities of Implementing Artificial Intelligence in Auditing Practices: A Case Study of Nigerian Accounting Firms. Asian Journal of Economics, Business and Accounting, 24(1), 32–45. https://doi.org/10.9734/ajeba/2024/v24i11210

Omoteso, K. (2012). The application of artificial intelligence in auditing: Looking back to the future. Expert Systems with Applications, 39(9), 8490–8495. https://doi.org/10.1016/j.eswa.2012.01.098

Owonifari, V. O., Igbekoyi, O. E., Awotomilusi, N. S., & Dagunduro, M. E. (2023). Evaluation of Artificial Intelligence and Efficacy of Audit Practice in Nigeria. Asian Journal of Economics, Business and Accounting, 23(16), 1–14. https://doi.org/10.9734/ajeba/2023/v23i161022

Schumann, G., Carlos, J., & Gómez, M. (n.d.). Natural Language Processing in Internal Auditing -a Structured Literature Review.

Seethamraju, R., & Hecimovic, A. (2022). Adoption of artificial intelligence in auditing: An exploratory study. Australian Journal of Management, 48(4), 780–800. https://doi.org/10.1177/03128962221108440

Shaoyu Liu, S. L. (2022). Robotic Process Automation (RPA) in Auditing: A Commentary. International Journal of Computer Auditing, 4(1), 022–027. https://doi.org/10.53106/256299802022120401003

Temitayo Oluwaseun Jejeniwa, Noluthando Zamanjomane Mhlongo, & Titilola Olaide Jejeniwa. (2024). A COMPREHENSIVE REVIEW OF THE IMPACT OF ARTIFICIAL INTELLIGENCE ON MODERN ACCOUNTING PRACTICES AND FINANCIAL REPORTING. Computer Science & IT Research Journal, 5(4), 1031–1047. https://doi.org/10.51594/csitrj.v5i4.1086

Tudor, A., & Deliu, D. (2021). Reflections on the human-algorithm complex duality perspectives in the auditing process. https://doi.org/10.1108/QRAM-04-2021-0059

Ukpong, E. G., Udoh, I. I., & Essien, I. T. (2019). Artificial Intelligence: Opportunities, Issues and Applications in Banking, Accounting, and Auditing in Nigeria. Asian Journal of Economics, Business and Accounting, 1–6. https://doi.org/10.9734/ajeba/2019/v10i130099