The application of artificial intelligence in internal auditing

Abstract

Abstract. In modern business environments, internal audit is crucial for effective enterprise management, providing a diagnostic function and prioritizing the achievement of the entity's strategic goals. The internal audit department evaluates the performance of the enterprise's business processes, contributes to the improvement of the risk management system, assists in achieving core business objectives, and enhances the control function within the enterprise. As noted by Rudnytskyi V.S., internal audit is a system of observation and expert evaluation of the economic activities of an enterprise and its structural units for the purpose of substantiating and adopting optimal tactical and strategic decisions [1, p. 363]. Furthermore, here is the definition provided by the international Institute of Internal Auditors: "Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes" [2, p. 38]. Internal audit within the enterprise is essential for an objective assessment of its operations, management system, and control function, as well as for assisting management and the governing body in improving processes and achieving strategic operational goals. Therefore, the internal audit system is undeniably effective and necessary within enterprise management, and its development and automation are crucial. Today, amid transformational changes and the rapid development of information technologies, one of the key areas is the implementation of Artificial Intelligence (AI) technologies into the enterprise management system. Naturally, AI cannot replace the internal auditor, but it can become a powerful assistant, a tool for information processing and analysis, document generation, and informational support. AI rapidly processes large volumes of textual documents (policies, procedures, contracts, internal regulations), which can help identify inconsistencies and evaluate compliance with internal standards (for example, whether contracts conform to established templates). AI analyzes and summarizes audit results, deviation reports, and multi-period review findings, which can quickly orient the auditor regarding key trends and potential risks. When AI is supplied with data, it can detect atypical transactions or patterns indicative of an error. Auditors can also apply AI to develop audit programs and plans, determine business process performance indicators, and model enterprise activity risks. Therefore, the listed capabilities of AI for internal audit purposes are not exhaustive. The directions of AI use will depend on the tasks the auditor sets for artificial intelligence technologies. The application of AI increases the speed and efficiency of work, but at the same time, its use requires consideration that it entails a loss of information confidentiality, as data is uploaded to the AI system, and the final management decision always rests with the professional specialist.