Artificial Intelligence in Auditing: How Auditor AI Use Can Mitigate Legal Liability

Audit firms are investing billions of dollars into artificial intelligence (AI) technology. These investments have the potential to transform the audit landscape and potentially improve the efficiency and effectiveness of audit processes. These investments might also result in wider benefits for audit firms, as audit firms can leverage this technology to reinforce perceived objectivity and trust in the audit. This article summarizes a recent study by Libby and Witz (2024) that finds that the use of AI can help mitigate auditor liability by limiting the effects of the appearance of auditor independence conflicts on juror negligence assessments. This article discusses the implications of these findings. It discusses how these findings indicate a potential solution to a long-standing dilemma that audit firms have faced, where audit firms may desire to invest in favorable relationships with their audit clients while also being seen as performing objective and unbiased audit work.