AUDITORS WARN OF AI BIAS RISKS IN FINANCIAL REPORTING AND ASSURANCE

Auditors have raised concerns over the potential for artificial intelligence to introduce bias and undermine professional judgement in financial reporting and audit processes. The warning came during the 2026 Audit Committee Institute Conference in Lagos.

Chairman of the Audit Committee Institute, Christian Ekeigwe, highlighted how AI is increasingly used to generate narrative disclosures, risk factors, going concern assessments, and other critical sections of financial statements. While AI enhances efficiency and consistency, it poses risks such as “hallucinations”—confident but inaccurate outputs—and automation bias, where professionals over-rely on machine-generated results.

Ekeigwe noted that audit tools employing AI for anomaly detection, journal entry testing, and risk scoring could lead auditors to defer critical thinking to algorithms. “The most acute risk is not that AI will replace auditors, but that auditors will stop thinking and defer to the machine in their place,” he cautioned.

The integration of AI also complicates audit committee oversight, as boards may endorse processes they do not fully understand. Ekeigwe urged practitioners to strengthen technical literacy, maintain vigilance, and apply robust professional scepticism when reviewing AI-assisted outputs.

Partner and Head of Audit at KPMG West Africa, Dr. Goodluck Obi, emphasised the foundational importance of strong internal controls, governance, and human accountability. He clarified that while auditors provide reasonable assurance, primary responsibility for financial integrity lies with management and directors.

As AI adoption accelerates in corporate reporting, experts called for enhanced governance frameworks, transparency in AI usage, and continuous validation to safeguard the reliability of financial statements and public trust in capital markets.