A CONCEPTUAL FRAMEWORK FOR REPLACING AUDIT COMMITTEES WITH ARTIFICIAL INTELLIGENCE INFUSED BOT

Abstract

Due to advances in machine learning technology in recent years, artificial intelligence is becoming an increasingly viable replacement for human labor across a wide domain of business operations traditionally thought to be safe from the ever-widening reach of automation. We argue that one such function that may be an increasingly fitting candidate for such automation is the audit committee. In recent years, however, several shortcomings among prominent companies with regards to financial reporting quality have highlighted the weaknesses of audit committees and eroded billions in shareholder wealth. We offer a solution to the increasing problem of audit committee ineffectiveness in the modern business environment by proposing that the functions of audit committee be delegated to Artificial Intelligence infused bots. We find that such a system would have notable policy implications for shareholders, investors, regulators such as the SEC, and society at large.

Acknowledgements

The authors would like to thank Nicole Conrad, CPA who was the research assistant on this paper for her contributions and dedication.

Additional information

Notes on contributors

Prakash Dheeriya

Dr. Prakash Dheeriya is a Professor of Finance at California State University-Dominguez Hills. He was the past chair of the finance department. He has over 50 refereed journal articles to his credit. In addition, he has authored 35 children’s books: 20 books in the Finance for Kidz series (.www.finance4kidz.com)  and 15 books in the Law for Kidz (www.law4kidz.com) series. These children’s books have been translated in 10 languages and are available in over 50 countries. His research passion is developing ideas that are out of the box, forward thinking, as well as utilitarian

Meghna Singhvi

Dr. Meghna Singhvi is an Associate Professor at California State University - Dominguez Hills. She graduated from Florida International University in 2011 with her doctorate and her dissertation focused on audit committee director turnover. She has published several research papers in top-tier accounting journals such as Accounting Horizons and Journal of Accounting and Public Policy. Her current research focuses on CEO Power and Diversity, gender on corporate boards and busyness of audit committee directors. She is passionate about integrating her research into the classroom and bridging the gap between industry experts and students at CSUDH.