Business and operations
Statutory Audit
The problem
The tool writes a fluent work description saying all customers were confirmed when only a sample was tested, or leaves out two balances still open. The file then states something that was not done, and the conclusion does not survive review.
30 courses · 5 specific to this profession
A process from your work
How long does it take you to prepare the working papers for an audit?
- Step 1The tool drafts the summaries and conclusions of the working papers from the audit logs and documents.
- Step 2You count every figure in the conclusion yourself and compare it with the log.
- Step 3The audit judgement and the sign-off of the working paper stay with the auditor.
- Where the tool goes wrongThe conclusion hides a disputed difference and writes the missing replies as received.
- The verification stepCount the log yourself: replies that agree, replies with a difference, and those never returned.
More: what was measured and the full check
What changed, as measured
After initial tests, the internal audit function of a large company estimated that efficiency rose by 50 to 80 per cent across various processes.
Who was measured: The internal audit function of a large multinational energy company in Germany, using ChatGPT in its audit work.
The caveat: The audit team's own estimate after initial tests, not timed against a control group; internal audit, not statutory audit.
The check, step by step
- Count the log yourself before reading the conclusion: how many requests were sent, how many replies agree, how many show a difference and how many never came back. The total must equal the sample size.
- For each reply with a difference, open the customer's reply and the sales ledger and investigate the cause (timing, a disputed invoice, an error), as ISA 505, paragraph 14 requires. Record whether the difference is a misstatement.
- For each request with no reply, perform alternative procedures under ISA 505, paragraph 12, for example examine cash received after the balance sheet date and the shipping documents.
- Rewrite the conclusion with the log's numbers ("9 of 12 agree; 1 difference under investigation; 2 no reply, covered by alternative procedures") and do not close the working paper until every line has its own result.
The course covers audit evidence, audit procedures and sampling with AI.
We can help you with this process: “Audit AI: Evidence and procedures”, 8 hours.
A documented failure pattern
Confirmations "agree", though three are still open
A conclusion an AI tool drafts for a statutory auditor on the receivables confirmation working paper, from the log of customers' replies.
Source: Financial Reporting Council, 2026, and 3 more.
Why it is easy to miss
The sentence has the form of the standard conclusion that closes every working paper, so the reviewer reads it and moves on to the next one. But it lumps three groups together: 9 replies that agree, 1 reply with a difference and 2 requests with no reply. The disputed difference disappears ("no differences were found") and the two non-replies are written as received. The numbers are in the log, but the conclusion does not follow from them: the tool summarises the majority and states it with full certainty. The phrase "no further procedures are needed" closes exactly the two pieces of work that remain: investigating the difference and performing alternative procedures for the customers who did not reply.
Where the failure pattern is documented: Supervisory guidance from the UK Financial Reporting Council on generative and agentic AI in audit (March 2026); a PCAOB staff publication, United States (July 2024); the FinanceBench study (arXiv, November 2023); ISA 505 on external confirmations, IAASB Handbook (2013).Sources: Financial Reporting Council, 2026; Public Company Accounting Oversight Board, 2024; arXiv, 2023; International Auditing and Assurance Standards Board, 2013.The case above is ours, written for work in Albania; the laws it names were checked against the official text.
What it looks like
The confirmation logCustomers in the sample: 12. Replies agreeing with the ledger: 9. Replies with a difference: 1 (the customer disputed an invoice). No reply: 2.
The AI tool's conclusion on the working paperThe receivables confirmations were received and agree with the sales ledger. No differences were found; no further procedures are needed.
Translated from the Albanian original.
Specialist courses for this profession
Audit AI: Operations foundation
Audit AI: Risk and controls
Audit AI: Evidence and procedures
Audit AI: Reporting and opinions
Audit AI: Preparation for assessment
What you leave with
The working paper, corrected sentence by sentence against the work actually done, and the checklist that goes with it: assertion tested, direction of the test, sample, source of evidence, open items. Before review, an experienced auditor unconnected to the engagement finds there the evidence behind each sentence.
Statutory Audit
The catalogue lists all 30 together, with filters for format and time.