ISBN: 978-93-94174-93-1

Application of AI and Machine Learning in Modern Auditing

Assistant Professor, Department of Commerce (CA), VHNSN College (Autonomous), Virudhunagar, India

Artificial intelligence (AI) and machine learning (ML) are ushering in rapid change to the current State of auditing and provide auditors with the ability to apply agile and strategic methodologies That address the rapidly evolving financial sector. Traditional audit methodologies rely heavily on A combination of manual sampling and periodic reviews for evaluating risk, which limits the Ability to detect complex financial irregularities. In contrast, AI-based auditing tools allow Auditors to analyse huge amounts of financial data in real time while also improving the accuracy, Efficiency, and reliability of the auditing process. Using ML, auditors can use the ability of ML Algorithms to develop insights into what constitutes abnormal data, predict future risks based on Trends in the transacted data, and identify possible instances of fraud through learning from prior Transactional history, which provides an avenue for more proactive risk assessment through Continuous auditing as opposed to reactive verification. Additionally, AI enhances the decisionmaking process by providing data-driven decisions, which reduces the potential for human error And provides more comprehensive analysis of how an organization is performing. The integration Of AI, analytics, automation and digital platforms thoroughly supports enhanced compliance Monitoring and provides greater transparency to financial reporting. Despite the benefit gained From AI and ML, there are inherent challenges that continue to present significant issues to the Profession including data privacy issues, algorithmic bias, and skills shortage. Overall, Implementing AI and ML represents a transformation in auditing practice that allows auditors to Offer far more strategic and timely assurance services in the increasingly digital world we live in..

*Corresponding author; e-mail: kanagavel@vhnsnc.edu.in

Cite this Chapter: Kanagavel N. and Chelladurai C. 2026. Application of AI and Machine Learning in Modern Auditing. In: Dr. Lubna Suraiya Dr. P. Kanchana (Eds.). Commerce Reimagined: The Future of Trade and Transactions (Vol-III). Excellent Publishers, India. pp. 95-104. doi: https://doi.org/10.20546/978-93-94174-93-1_3_7