CONTROL ISSUES: HOW PROVIDING INPUT AFFECTS AUDITORS' RELIANCE ON ARTIFICIAL INTELLIGENCE

51 Pages Posted: 30 May 2024

See all articles by Benjamin Commerford

Benjamin Commerford

University of Kentucky

Aasmund Eilifsen

NHH Norwegian School of Economics

Richard C. Hatfield

University of Alabama

Kathryn M. Holmstrom

Iowa State University - College of Business

Finn Kinserdal

NHH Norwegian School of Economics - Department of Accounting, Auditing and Law

Date Written: May 29, 2024

Abstract

In this study, we examine auditors' reliance on artificial intelligence (AI) systems that are designed to provide evidence around complex estimates. In an experiment with highly experienced auditors, we find that auditors are more hesitant to rely on evidence from AI-based systems compared to human specialists, consistent with algorithm aversion. Importantly, we also find that a small amount of control (i.e., providing input to specialists) can mitigate this aversion, though this effect depends on auditors' personal locus of control (LOC). Providing input increases reliance on evidence from AI systems for auditors who believe they have little control over their outcomes (i.e., an external LOC). In contrast, auditors with an internal LOC are particularly hesitant to rely on AI-based evidence, and providing input has little impact on their reliance. Interviews with experienced auditors corroborate our findings and suggest auditors feel a greater sense of control working with human specialists relative to AI-based systems. Overall, our results suggest perceived control plays an important role in auditors' aversion to AI and that auditors' individual traits can affect this aversion.

Keywords: data analytics, artificial intelligence, complex estimates, auditing

Suggested Citation

Commerford, Benjamin and Eilifsen, Aasmund and Hatfield, Richard C. and Holmstrom, Kathryn and Kinserdal, Finn, CONTROL ISSUES: HOW PROVIDING INPUT AFFECTS AUDITORS' RELIANCE ON ARTIFICIAL INTELLIGENCE (May 29, 2024). Available at SSRN: https://ssrn.com/abstract=4847775 or http://dx.doi.org/10.2139/ssrn.4847775

Benjamin Commerford

University of Kentucky ( email )

Lexington, KY 40506
United States

Aasmund Eilifsen

NHH Norwegian School of Economics ( email )

Helleveien 30
N-5045 Bergen
Norway
+47 99537764 (Phone)

Richard C. Hatfield (Contact Author)

University of Alabama ( email )

101 Paul W. Bryant Dr.
Box 870382
Tuscaloosa, AL 35487
United States
205 348-2901 (Phone)

Kathryn Holmstrom

Iowa State University - College of Business ( email )

Ames, IA 50011-2063
United States

Finn Kinserdal

NHH Norwegian School of Economics - Department of Accounting, Auditing and Law ( email )

Helleveien 30
N-5045 Bergen
Norway

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