Using AI for audit techniques

Source: The post is based on the article “Using AI for audit techniques” published in “The Hindu” on 4th October 2023.

Syllabus: GS2- Governance- e-governance

News: The article discusses the challenges faced by India’s Comptroller and Auditor General (CAG) in auditing AI systems, emphasizes ethical use of AI in audits, and highlights the need for AI regulations and standardized data for accurate and fair auditing. It also briefly discusses global AI regulations and frameworks.

What challenges does AI present to auditing?

Ensuring Ethical AI Use: The CAG, Girish Chandra Murmu, emphasized that utilizing AI for auditing must be done ethically and responsibly to avoid inaccurate findings.

Data Integrity and Bias: It is crucial that AI uses data that are complete, timely, and relevant, and auditors must be cautious of inherent data bias, especially when data are obtained from unauthorized sources like social media.

AI Regulation and Standardization: The challenge for the CAG involves not only regulating AI use but also ensuring standardized data across varied government entity platforms.

International Audit Framework: The  Supreme Audit Institutions (SAIs) of the G20 conference highlighted a need for a shared international audit framework related to AI to address audit challenges comprehensively.

Adopting Existing Frameworks: Currently, auditors must adopt and adapt existing frameworks and regulations related to IT and communicate with all stakeholders due to the absence of explicit AI auditing guidance.

Data Management Complexity: Managing data, ensuring its integrity, and integrating it from diverse platforms and sources become challenging in AI audits.

Consulting Experts: AI audit assignments might need the involvement of various specialists, such as data scientists and architects, due to the intricacy of AI technologies.

What regulatory actions have been taken regarding AI?

Global Level Regulatory Action

EU AI Act: The European Parliament approved the act, creating new rules and scrutiny for AI tools like ChatGPT. Developers need to get their systems reviewed and approved before they can be used commercially. It also restricts real-time biometric surveillance and prohibits “social scoring” systems.

UK’s AI Safety Regulation Intent: UK Prime Minister Rishi Sunak wants the UK to be the “geographical home” of AI safety regulation, signaling a direction towards detailed AI regulatory practices.

AI Auditing Frameworks: Various frameworks for AI audit, like the COBIT framework and the COSO ERM Framework, are in place globally. The UK’s Information Commissioner’s Office also published draft guidance on an AI auditing framework.

Indian Level Regulatory Actions

Digitalization of Audit Process: The CAG in India will implement “One Indian Audit and Accounts Department One System,” a web-enabled IT application, to digitalize the audit process from April 1, 2023.

Need for AI Regulation: India perceives a need to establish AI regulation, inspired by initiatives from global counterparts like the EU. However, specific Indian regulatory actions regarding AI are not detailed.