How Does Artificial Intelligence Shape the Audit Industry?

73 Pages Posted: 27 Oct 2020 Last revised: 27 May 2021

See all articles by Kelvin Law

Kelvin Law

Nanyang Business School, Nanyang Technological University

Michael Shen

National University of Singapore

Date Written: July 12, 2020


This study uses audit firms’ job postings from 2010 to 2019 to present descriptive evidence of the long-term impact of using artificial intelligence (AI) technology on the audit industry. We exploit the staggered job postings for personnel with AI skills at audit office locations across the United States as a proxy for the implementation of AI technology at local audit offices. We show in a difference-in-differences setting that relative to audit offices that do not yet have any jobs requiring AI skills, audit offices that have jobs requiring AI skills experience an increase in the number of auditor jobs. The effects are stronger when audit offices are in less urbanized areas, and when audit offices have more jobs that could be replaced by AI. We estimate instrumental variable regressions and show similar patterns. AI implementation also significantly increases the skill and education requirements for auditor jobs. Last, we find that audit offices with AI implementation do not significantly lower audit and tax fees, but they do significantly reduce the percentage of clients with adverse restatements and audit lag. Overall, our evidence indicates that AI does not replace auditor jobs but leads to upskilling in auditor jobs and improves audit quality.

Keywords: Artificial intelligence, auditors, machine learning, audit quality

JEL Classification: O33, M42, J6, J23, J24

Suggested Citation

Law, Kelvin and Shen, Michael, How Does Artificial Intelligence Shape the Audit Industry? (July 12, 2020). Nanyang Business School Research Paper No. 20-31, Available at SSRN: or

Kelvin Law

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798

Michael Shen (Contact Author)

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, Singapore 119245

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