Financial Executives’ Responses to the Use of Artificial Intelligence in Financial Reporting and Auditing

Abstract

This article summarizes “How do financial executives respond to the use of artificial intelligence in financial reporting and auditing?” (Estep, Griffith, and MacKenzie 2024; hereafter EGM). EGM survey financial executives about their perceptions of AI in financial reporting and experimentally examines how they would incorporate AI-generated information when resolving proposed audit adjustments. EGM find that financial executives do not have negative perceptions of AI. Further, in a hypothetical scenario, they find that when a financial executive’s company uses AI to help prepare an accounting estimate, financial executives book larger audit adjustments if auditors use AI to audit the estimate than if auditors do not use AI. If a financial executive’s company does not use AI, auditors’ use of AI has minimal influence on financial executives’ decisions. This paper provides insights for practice based on EGM’s findings.JEL Classifications: M41; M42; O33.