Earlier this month, the Center for Audit Quality (CAQ) released the results of a survey of institutional investors that focused on opinions and preferences related to the use of GenAI in public company audits and opinions on the use of GenAI in portfolio companies among institutional investors. The survey was conducted by KRC Research. The survey was conducted in May and involved 102 investors. The survey revealed the following key takeaways regarding the use of AI in audits:

– Nearly all trust the use of AI to support the audit processes and say use of AI increases trust in the audit of public companies.
– Accuracy and efficiency is seen as the most important benefit of the use of AI in the audit, followed by enhanced risk assessment and prioritization.
– Regular audits of AI systems and outputs, and AI usage policies, are seen as most important to maintain trust in the use of AI in the audit process.
– Company management is seen as most responsible for ensuring the responsible use of AI in the audit process by a small plurality (38%).
– Increased accuracy and reduced errors when using AI increases trust in the audit.
– The most cited concerns about the use of AI in the audit process is data security and privacy, lack of human oversight, and lack of clear auditing guidelines

With regard to the use of AI in portfolio companies, the key takeaways were:

– Nearly all are confident in the ability of portfolio companies to manage the risks associated with the use of AI.
– Data privacy and cybersecurity are the biggest risks associated with the use of AI.
– Nearly six in ten feel federal regulations on the use of AI are clear and comprehensive, while one third say federal regulations lack comprehensiveness.
– Nearly all say it is very or extremely important for portfolio companies to have formal structures to govern the use of AI.
– Regularly assessing the risks of AI and formal policy guidelines on the use of AI are seen as the most important steps to manage the risks associated with the use of AI.

– Dave Lynn