Application of Artificial Intelligence and Audit Quality in Nigeria

Abstract

This study examined the effect of artificial intelligence on the quality of audit practice in Nigeria. Specifically, examined how expert systems, machine learning, and intelligent agents affect audit quality in Nigeria. The study employed a survey research design. The population of this study comprised 178 practicing accounting firms in Nigeria with the application of artificial intelligence. A sample size of 125 was selected using the purposive sampling technique. Data was obtained from primary sources using a well-structured questionnaire. Data were analysed using descriptive statistics and OLS regression analysis. The result of the study indicated that expert systems, machine learning, and intelligent agents exhibited a significant positive relationship to audit quality in Nigeria. Thus, the study concluded that the application of artificial intelligence positively influences the quality of auditors’ reports. With the positive impact made by artificial intelligence, in the coming decades, intelligent systems will take over more and more decision-making tasks from humans. The study recommended constant training of accountants and audit personnel on the use of AI techniques for the improvement of audit quality. Audit firms in Nigeria should invest in machine learning tools to further improve audit quality in the country. Also, the use of intelligent agents that assist in the classification of detecting objects into different categories should be increased among audit firms in Nigeria. Keywords: Artificial Intelligence, Expert Systems, Machine Learning, Intelligent Agents, Audit Quality. JEL Classification: M42, M49, C451. Journal Reference Format: Dagunduro, M.E., Falana, G.A., Adewara, Y.M. & Busayo, T.O. (2023): Application of Artificial Intelligence and Audit Quality in Nigeria. Humanities, Management, Arts, Education & the Social Sciences Journal. Vol. 11. No. 1, Pp 39-56. www.isteams.net/humanitiesjournal . dx.doi.org/10.22624/AIMS/HUMANITIES/V11N1P4

Evaluation of Artificial Intelligence and Efficacy of Audit Practice in Nigeria

“…John McCarthy, a prominent computer scientist, introduced the term "Arti cial Intelligence" in 1955-56 during the Dartmouth College Arti cial Intelligence Conference. The purpose of this conference was to demonstrate how machines could be developed to imitate the problem-solving abilities of humans, as exempli ed by the Logic Theorist program initiated by Allen Newell, Cliff Shaw, and Herbert Simon (Dagunduro, et al, 2023). McCarthy de ned AI as the science and engineering of creating intelligent machines (Akinadewo, 2021).…”

“…The utilization of Arti cial Intelligence in the audit process is crucial in predicting potential nancial loss or distress (Dagunduro et al, 2023). The audit process aims to identify any errors or misstatements in the nancial statements of companies, while AI refers to the integration of advanced technologies to improve business operations' e ciency and effectiveness.…”

“…Several studies have been conducted on the effect of arti cial intelligence on accounting and auditing practices. In a study conducted by Dagunduro et al (2023), the impact of arti cial intelligence on the quality of audit practice in Nigeria was investigated. The study used a survey research design that involved 178 practicing accounting rms in Nigeria that were using arti cial intelligence applications.…”

“…and Zaman, 2018;Chen et al, 2018;Dagunduro, et al, 2023;James, 2014; Odoh et al, 2018; Taghizadeh, et al, 2018; Vardia et al, 2021) among others that suggest that data mining and machine learning techniques help organizations to sort through large data sets, identify patterns and relationships, predict future trends, and make more informed business decisions, which, in turn, can improve audit practice. The use of machine learning to automate audit tasks, analyze data, identify exceptions and potential problems, and…”

“…Audit practitioners may work independently in accounting rms or as consultants. However, beyond their accounting and investigative skills, they are also expected to possess excellent communication and analytical abilities to present their audit ndings and recommendations clearly and explain their implications to management or the board of directors, where necessary (Awotomilusi et al, 2022;Dagunduro et al, 2023).Over the past few years, there has been a growing trend in the use of AI, particularly machine learning, in accounting and auditing. However, while there has been signi cant progress in AI and ML technologies, they have not yet been able to completely replace the need for human expertise and decision-making (Comerford et al, 2019).…”