ICAI to arm CAs with AI tools for sharper audits: Charanjot Singh Nanda

The Institute of Chartered Accountants of India (ICAI) is developing AI tools that will be provided to professionals to extract desired information from voluminous data and identify any financial stress, fraud, or other specific audit requirements, said Charanjot Singh Nanda, president, ICAI, in an interview.

AI cannot replace natural intelligence, but will work as a faithful servant to professionals, and hence, worries about this technology affecting work opportunities for CAs are misplaced, he added.

Growing use of AI

The ICAI’s move to equip CAs with AI comes at a time when large consulting and audit firms are offering AI-powered services to their clients. Despite improved efficiency due to technology, the demand for CAs is expected to rise, and the regulator anticipates their number to increase from 500,000 currently to three million over the next 25 years, Nanda said.

“The ICAI has set up a group to identify and create digital tools. Once these are developed, they can be presented to the institute’s council to ensure they are available to the broader membership, thereby enhancing audit quality. We will need to assess the costs involved to determine the pricing model. Whether it will be offered freely or if some cost-sharing will be involved is still under consideration,” he said.

The ICAI president said AI enables exception reporting and data analytics. Exception reporting is the practice in audits where only deviations are flagged to avoid the repetition of confirming everything that is in order.

“AI allows auditors to sift through entire datasets to identify critical information or clues that are very important. This process of extracting desired information saves a significant amount of time, allowing auditors to focus on key issues and present a more accurate picture of the company’s affairs,” he said.

“AI can also easily detect fraud. Auditors simply need to command what information they want, and it will be extracted. Whether focusing on funds, processes, or material movements, the system responds based on the question framed by the auditor,” he added.

Nanda, though, explained that AI will never undermine natural intelligence. “CAs possess this intelligence. AI handles the monotonous and repetitive tasks. The ability to frame complex queries and to go deep into issues remains the exclusive domain of CAs. AI serves as a faithful servant that enables and enhances our work, rather than reducing professional opportunities.”

CAs possess this intelligence. AI handles the monotonous and repetitive tasks.

India eyes opportunities

AI is fast becoming a major force reshaping the business landscape, with new business registrations surging, consulting firms, including EY, KPMG, Deloitte, and PwC, offering AI-powered software solutions to clients, and policymakers examining how the convergence of AI, life sciences, energy and quantum computing will play out in the future.

India could generate an additional $1.7 trillion in economic value over the next decade by harnessing AI, said government policy think tank NITI Aayog’s AI vision roadmap, released in September.

The think tank projected that AI adoption can accelerate India’s growth to 8% annually, scaling up the size of the economy to $8.3 trillion by 2035, compared to the current official projection of gross domestic product (GDP) rising to $6.6 trillion by 2035 from about $4 trillion now, Mint reported on 15 September, quoting the think tank’s roadmap.

Nanda also said that the ICAI is focused on providing the right courses and training to support national growth. “The growth in the number of professionals is a natural process. Public awareness of the need for more CAs attracts students. We currently have about 1.1 million students,” he said, adding that the ICAI is also creating awareness about the prospects of the profession.

He pointed out that the free trade agreements (FTAs) will significantly benefit Indian CAs. “Our CAs are valued internationally for their responsibility, intelligence, timely delivery, and discipline. FTAs will open vast opportunities for them.”