Audit committee members, regulators and corporate governance professionals have been urged to embrace artificial intelligence while strengthening independent professional judgement, as experts warned that technology cannot replace the critical thinking needed to safeguard financial reporting and investor confidence.
The call was made during the two-day Audit Committee Conference organised by the Audit Committee Institute in Lagos, where keynote speakers focused on preventing audit failures and strengthening governance under the conference theme, “Guardians of Truth: Informed, Vigilant, Attending.”
Delivering one of the keynote addresses, Christian Ekeigwe, the chairman, Audit Committee Institute, said artificial intelligence should be viewed as a tool that enhances audit quality rather than a replacement for professional judgement.
He argued that while AI excels at analysing vast amounts of financial data, identifying anomalies and performing large-scale testing, it lacks the capacity for what he described as “abductive reasoning”, the ability to interpret incomplete or conflicting evidence within a specific business context.
According to him, AI can identify statistical outliers, but it cannot determine whether an unusual transaction stems from an honest mistake, a legitimate business event or deliberate financial manipulation.
“AI can support audit procedures at a scale that no human team can match. But it cannot do what auditing has always fundamentally been: a professional act of abductive reasoning by a qualified, independent, accountable practitioner,” he said.
Ekeigwe warned auditors against becoming overly dependent on AI-generated outputs, saying the real challenge facing the profession is not technological but intellectual.
“The question is whether you are allowing AI to do your thinking for you,” he said, cautioning that relying on AI risk scores without independent judgement amounts to “performing” professional scepticism rather than exercising it.
He also cautioned audit committees against approving AI-generated financial disclosures without understanding how they were produced.
“The capital market does not need faster algorithms… What the capital market needs… is the thinking guardian: informed, vigilant, and attending,” he said.
In a separate keynote, Goodluck Obi, partner and head of Audit, KPMG West Africa, examined the causes of audit failures and measures required to prevent them, describing audit failure as a situation where auditors issue misleading opinions because they fail to detect material errors, fraud or omissions in financial statements.
He said the consequences often extend beyond individual companies, leading to financial losses, reputational damage, regulatory sanctions, litigation and, in severe cases, business collapse.
Drawing lessons from corporate failures including Enron, Wirecard, Carillion, Cadbury Nigeria, Afribank and Tingo Group, Obi said audit failures are commonly driven by auditor incompetence, weak governance and oversight, regulatory non-compliance, and intentional or unintentional financial misstatements.
He recommended stronger risk-based auditing, continuous technical training, specialist involvement in complex audits, enhanced professional scepticism, stronger internal controls and more rigorous regulatory oversight to improve audit quality. He also encouraged firms to leverage analytics and AI for anomaly detection while preserving independent judgement.
Obi stressed that preventing audit failure requires collective action by auditors, management, boards of directors and audit committees, each with clearly defined governance responsibilities.
“Audit failure is rarely just an audit issue; it arises from breakdowns across governance, management, culture, and oversight, ultimately undermining financial reporting integrity and investor trust.
“Therefore, it is a collective responsibility of all stakeholders in the business, including the Audit committee,” he added.
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