The auditor is no longer alone. There’s another intelligence in the room
Auditors are increasingly adopting artificial intelligence to enhance the efficiency and accuracy of audits in India. These technological advancements allow auditors to analyze vast amounts of data and detect inconsistencies effectively. AI tools ...
Audits have traditionally meant auditors spending hours sifting through ledgers, invoices, contracts and financial records. Artificial intelligence (AI) is changing that equation, helping auditors analyse large volumes of data, flag unusual transactions and identify potential compliance and fraud risks.
This is especially important in India, where the regulatory landscape is vast. Businesses today have to navigate more than 1,530 Acts and Rules and comply with over 69,000 statutory obligations, covering everything from licences and filings to inspections, disclosures and operational requirements, according to a TeamLease RegTech report.
AI is moving beyond experimentation in the audit and accounting industry, with firms increasingly using the technology for data analysis, documentation and other routine audit processes.
According to IDC’s ‘The Future of Audit and Accounting in the AI Era’ report, which surveyed more than 1,000 audit and accounting professionals globally, 66% of respondents said AI is already embedded in their firm’s strategy, being widely used in select functions or being tested through pilot projects. More than half (53%) also agreed or strongly agreed that AI tools can improve audit quality.
“The biggest benefit of using AI in audit and compliance is a more efficient, less disruptive, and more insight-driven process. The real value is not only in saving time, but in enabling earlier action, stronger controls, better documentation, and faster closure,” Sachin Mohe, Partner, Audit Technology Specialist, Deloitte India, told ET Online.
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Among the specific ways AI can be used in audit, one application is transaction analysis. Once a ledger or transaction dump is uploaded with appropriate instructions, AI-based audit tools can help flag duplicate entries, unusual trends, missing approvals and transactions that fall outside predefined criteria.
“Using AI in audit and compliance helps automate repeat audit procedures such as big data analytics with value impact, summarising gaps in audit evidences/ source documents, identifying duplicate transactions, and highlighting exceptions in terms of fraud risk scenarios with the help of AI agents,” Tarun Kher, Partner, Risk Advisory, Business Advisory at BDO India, said.
As AI moves deeper into the audit process, large firms are building AI tools into their cloud-based platforms.
“Audit firms are incorporating agentic and AI-enabled capabilities within their audit platforms to support specific audit and compliance activities, including risk sensing, evidence retrieval, document analysis, technical accounting research, audit documentation, financial statement validation and the analysis of large datasets for items of audit interest,” said Samir Shah, Audit Leader, Deloitte Haskins & Sells LLP.
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Shah added that AI-assisted risk sensing, digitised document analysis, technical research assistance, drafting support for audit-related materials, first pass reviews of documentation, and financial statement validation are some of the capabilities that are built into such systems.
At Deloitte, these capabilities are plugged into Omnia, the firm’s global Audit & Assurance platform. It uses technology and data to support auditors across the audit process with AI helping to spot potential risks, analyse evidence and support workflows. Auditors, meanwhile, continue to make the key decisions.
EY has announced the global rollout of enterprise-scale agentic AI in its Assurance business. The technology is being built into EY Canvas, its global Assurance platform, which processes more than 1.4 trillion lines of journal entry data each year. The new AI framework is integrated with Microsoft Azure, Microsoft Foundry and Microsoft Fabric, allowing AI agents to work across different parts of the audit process.
KPMG is also using AI through KPMG Clara, its global audit platform. According to the firm, its governed AI agents can continuously analyse data and support data-intensive audit procedures, allowing auditors to focus on judgement, scepticism and deeper risk assessment.
Protecting financial data
As AI adoption grows, experts and industry players recommend a range of safeguards to protect confidential financial and employee information. These include using approved enterprise AI tools, minimising and masking sensitive data, enforcing strict access controls, maintaining audit trails, vetting vendors and ensuring human oversight.
“Regulated use of AI platforms is imperative for organisational leads to prevent any breach of confidentiality of financial and employee data. While it is strongly advised to install enterprise-licensed versions/ subscription-based AI agents before uploading sensitive information, additional safeguards such as masking/ encrypting personally identifiable information like employee names, PAN, Aadhaar, Bank Account details, or any other confidential financial payroll related information are imperative,” BDO’s Kher said.
Beyond the tools employees use internally, companies also need visibility into AI systems used by third-party vendors, experts said.
“Organisations need to build a complete registry of all the AI tools being used across the business. Companies may think they know what tools their employees are using, but in reality, they may not have full visibility. Companies also need to take greater responsibility for their vendors. They need to understand what AI tools third parties are using, how data is being handled and what risks those systems create," Rishi Agrawal, Co-founder & CEO, TeamLease RegTech, told ET Online.
Agrawal also stressed the need for clear internal rules on the use of AI and the type of data employees can share with such tools.
“Every organisation needs an AI policy that clearly defines what employees can use AI for and what kind of data can be shared with AI tools. There are already frameworks and regulations from regulators such as the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) that can be applied to AI-related risks,” he added.
The need for a proactive approach to AI safety and security has also been highlighted at the policy level. Chief Economic Advisor (CEA) V Anantha Nageswaran, speaking at an event organised by industry body ASSOCHAM in August, said, "I don't think we will have the luxury of time, particularly in the financial sector," stressing that institutions should first strengthen security frameworks to ensure "we don't lose what we already have" before leveraging AI at scale.
Putting the human auditor at the centre
As the focus on AI safeguards grows, the role of human judgement in the audit process can’t be overlooked.
Recently, the National Financial Reporting Authority (NFRA) — the regulator that oversees the audit profession in India — issued ten “general principles” on technology adoption in audits, encouraging the deployment of the latest tools but making it clear that the ultimate audit quality responsibility lies solely with the auditor. “Technology may inform and accelerate professional judgement; however, it cannot be a substitute for it and cannot be invoked to explain away an inappropriate conclusion,” the regulator said.
The “general principles” are part of the first edition of the NFRA Staff Series on Technology in Audit. They set out a principles-based framework, dos and don’ts and changes to audit processes and systems within which statutory auditors of public interest entities are required to evaluate, deploy and govern the use of technology.
According to Shah of Deloitte Haskins & Sells LLP, “AI operates within a human-led, AI-powered audit model. AI-generated outputs are reviewed, validated, and overseen by audit professionals before being used in audit workflows. Responsibility for evaluating evidence, addressing potential errors or false positives and reaching audit conclusions remains with audit practitioners.”
CAG is also expanding the use of AI
The Comptroller and Auditor General of India (CAG), the country’s supreme audit institution, has supported the use of AI through improved data analysis, anomaly detection, risk assessment and process automation under its Artificial Intelligence Strategy Framework.
According to the body, AI-generated outputs are to be used to support—not replace—auditors’ professional judgement and accountability.
The CAG has also issued an expression of interest (EoI) to establish a Sovereign AI and Data Platform with Agentic AI Applications, which is meant to serve as the central digital backbone for all present and future AI and analytics workloads.
Comptroller and Auditor General K Sanjay Murthy, while speaking at the 17th Annual Day of the Competition Commission of India (CCI), said that the country's apex auditor is modernising audit systems to improve the quality, speed and analytical depth of public auditing.
Evolving jobs, changing education
As the nature of work evolves, AI is also changing how audit teams are structured and how they operate.
According to Kapil Joshi, CEO of IT Staffing at Quess Corp, 15%-25% of compliance and reporting workflows in corporate functions are now being transformed through AI-assisted execution and automated audit trails. As per Quess Non-tech GCC Talent Landscape report, compliance is also becoming more platform-led, with 34%-38% of Finance, Risk & Governance job postings requiring skills in digital platforms, GRC tools and enterprise systems such as SAP S/4HANA, BlackLine, Alteryx and Power Automate.
“We are also seeing new roles such as AI Governance Analyst, Associate Director – AI Risk Governance, Responsible AI Engineer and Model Risk Consultant, reflecting the growing need to make AI systems explainable, auditable and compliant,” said Joshi.
“The broader model is moving towards ‘small teams, deep capability’, where success is measured less by the number of auditors and more by the complexity of work they can manage, the quality of decisions they support and their digital fluency across risk and compliance platforms.”
The changes are also being reflected in professional education.
The Institute of Chartered Accountants of India (ICAI), a statutory body established by an Act of Parliament, is incorporating AI, data analytics, and other subjects in its curriculum as it works to keep pace with the evolving technological and professional changes.
"We have formed the Committee for Review of Education and Training (CRET). It is working to review the entire curriculum, like what syllabus and subject need to be changed and training (articleship) … For an engineer, AI is a separate subject but for us, AI is not a subject but without AI, no chartered accountant can survive. Be it in employment or in practice, AI is a must," ICAI President Prasanna Kumar D was quoted by PTI as saying in May.
These changes are meant to reskill auditors rather than replace them. AI will reshape the nature of their work: less routine, more judgement, questions and decisions, with greater focus on areas where human judgement and experience matter more.
