Exploring AI and Audits

Auditors have been put on notice: artificial intelligence (AI) is here and it’s here to stay. The possibility of AI-enabled machines replacing human auditors is creating some angst. Are people right to be worried, and if so, what can they do to prepare for an AI takeover?

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Blackrock Affirms Sustainability Investing

BlackRock Corporation, which represents U.S.$25 trillion in assets under management, recently surveyed clients around the world, to understand the shift towards sustainable assets and how the pandemic may affect it. They came to some clear conclusions – principally that the extant trend towards raising the importance of sustainability as an investment objective along with profitability is not going away.

At the beginning of 2020, BlackRock laid out a series of steps to make sustainability a key component of its investment approach, driven by an investment conviction that an understanding of sustainability issues is essential to long-term investment performance. In mid-2020, they surveyed their clients to better understand their attitudes to sustainable investing, how the pandemic has affected implementation, and how innovation can spur adoption.

They found that 54% of the 425 investors surveyed, representing as estimated U.S.$25 trillion in assets under management, consider sustainable investing to be fundamental to investment processes and outcomes, 

The pronouncements of Blackrock add substance to the growth of sustainability investing and the need for ESG disclosures by corporations.

Watch out for Blockchain Risk

Blockchain is often touted as the answer in terms of internal control and audits, although some of the errors in this view have been addressed in numerous publications including his one. However, there are risks with blockchain and in view of the hype that has surrounded it, it is important that the risks be explored.

A major aspect of blockchain is that while it can provide an element of assurance about the accuracy of recorded transactions, it cannot deal with the need to reconcile the records with the physical assets. There are tools to help with this, but blockchain cannot do it alone.

Any auditor will immediately recognize that the need to agree physical assets to recorded ones is one of the most important elements of an audit. So people, including auditors, still need to verify the existence and condition of the assets.

There is a risk that might be called blockchain risk which arises in situations where blockchain is in place but people assume because of the hype that controls are all looked after when in fact they are not. At a superficial level, this is obvious to professional accountants but it always requires analysis to define the risks clearly.

CPA Founding Partner

Chartered Professional Accountants of Canada (CPA Canada), one of the largest national accounting organizations in the world, has chosen to become a founding partner of ThinkTwenty20.