ARTIFICIAL INTELLIGENCE AND AUDIT QUALITY: EVIDENCES BASED ON PUBLISHED AUDIT REPORTS OF NIGERIA DEPOSIT MONEY BANKS.

Abstract

The paper explored the impact of the adoption of Artificial Intelligence (AI) on the quality of audits of Deposit Money Banks (DMBs) in Nigeria based on secondary data in the form of published audited annual reports and financial statements of fifteen (15) Central Bank of Nigeria (CBN) licensed DMBs listed on the Nigerian Exchange Group (NGX) during the ten-year period, 2014 to 2023.  The study employed Panel data regression, fixed effects and random effects estimators. The results showed that the adoption of AI is positive and significantly correlates with an increase in audit fees (a measure of audit effort), and negatively and significantly with the absolute discretionary accruals, audit opinion adjustments, and financial restatements, which are all indicators of improved audit quality. In the paper, the recommendation is that CBN, Financial Reporting Council of Nigeria (FRCN), and Institute of Chartered Accountants of Nigeria (ICAN) should come up with an AI Audit Governance Framework to standardize AI disclosures and provide fair AI-driven audit quality improvement throughout the banking sector in Nigeria.