Audit partners see more use of AI at public companies

Nearly one-third of public companies are using artificial intelligence in their financial reporting, according to a new survey. 

The survey, released Wednesday by the Center for Audit Quality, polled a group of 748 audit partners at eight of the largest public accounting firms in the U.S. and found auditors are seeing public companies facing challenges in deploying generative AI technology in financial reporting.

But many auditors are concerned about the use of Gen AI technology, such as ChatGPT and Bard. Topping the list of concerns is data quality (47%), lack of mature technology (45%), data security risks (42%), and gaps in talent to implement and manage AI (40%). Business operations (62%) is the main area where auditors see public companies deploying AI technology.

The annual survey also found that pessimism in the economy has dropped by 30 percentage points since the fall of 2022. “Despite significant domestic political and global concerns, audit partners are significantly less pessimistic on the U.S. economy today compared to a year ago,” said CAQ CEO Julie Bell Lindsay in a statement. “Despite the improving economic outlook, audit partners see challenges ahead for businesses as inflation remains above historic levels, new regulations affect compliance costs, and cybersecurity threats remain high.”  

Three out of four audit partners believe regulations are having a negative impact on businesses, mainly due to increased regulatory and legal risks and compliance costs. Most of the audit partners surveyed believe regulation has had a discernible effect on business, with the vast majority (74%) saying the effects have been negative under current standard setting or rulemaking in the U.S.

The auditors who responded to the survey see nearly two-thirds of companies preparing for new global and U.S. climate reporting requirements, and 45% of the respondents’ companies are already voluntarily disclosing environmental and climate information. 

Cybersecurity has also become a major issue, and the proportion of survey respondents who see cybersecurity as a large economic risk jumped 20 percentage points since the fall of last year.  Cybersecurity was the third largest economic risk facing companies over the next 12 months according to the audit partners surveyed, rising from 32% in the fall 2022 survey to 52% in this year’s survey.