AI + Fraud

How does artificial intelligence shape the audit industry?

Management Science 2025, 71(5): 3641–3666 (Lead Article)

with Michael Shen

Best Archival Paper Award, 2021 AAA Auditing Midyear Meeting

AI does not replace auditor jobs but leads to upskilling and improves audit quality.

AI and auditor working together

Key takeaways

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The fear of AI replacing jobs

Headlines warn that AI will eliminate professional jobs. Auditing, with its repetitive tasks and document review, seems like an obvious target. But is this fear justified?

We examined what actually happens when audit offices adopt AI technologies. Our findings challenge the job-replacement narrative.

What we found

When audit offices adopt AI, they hire more people, not fewer. Employment increases by 4.3% on average. But the nature of work changes. Offices shift toward more technical and analytical roles.

AI automates routine tasks, freeing auditors to focus on judgment-intensive work: assessing risks, evaluating evidence, and communicating with clients. The technology is a tool that enhances human capabilities rather than replacing them.

Quality implications

AI adoption also improves audit quality. Offices using AI catch more errors and issue fewer restatements. The combination of human judgment and machine capability produces better outcomes than either alone.

The lesson

AI in auditing is not about replacement. It is about augmentation. The future of the profession is human-machine collaboration, not human-machine competition.

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