Artificial Intelligence

Internal Auditors Readiness

Presenter
Herculs Bizure
“
clinical trials
^ have people behaving like
In our banks, we
robots doing mechanical things, tomorrow
we’re going to have robots behaving like
people. We have to find new ways of
employing people.
“
John Cryan, CEO, Deutsche Bank
Quoted in Descartes Revisited: Do Robots Think? on medium.com 2017
What is Artificial Intelligence ?
The combination of cognitive automation, machine learning, reasoning, hypothesis
generation and analysis, natural language processing and intentional algorithm mutation
producing insights and analytics at or above human capability.
Source: Institute of Robotics Automation and Artificial Intelligence
Polling question? GO TO -> www.menti.com
9314 0855
Where are you on your AI journey?

A B

We’ve got a fully implemented AI solution We’re mid-implementation

C D
We’re building the case for investment in an We’re exploring AI solutions that may be
AI solution relevant for our industry

E
We’re interested in exploring AI, but aren’t
sure where to start
Technology has long disrupted jobs

“Automatable”

ATMs
Outsourcing and robots
“Non-automabtable”

Bank tellers Factory workers

Customer service reps Offshore call centers

The next wave of smart technology

“Automatable”

Chat bots
Robots
Autonomous
vehicles
Algorithms
Blockchain

??????
“Non-automabtable”

Hotel workers
Truck drivers

Primary care
physicians Accountants
+ Lawyers
Internal Auditors Offshore call centers

Tradable
 30%-40%
of existing business
process services

Why Intelligent Reliability

No sick days, services are
Consistency
Identical processes and tasks,
are likely to be
impacted by RPA

Automation?
provided 24/7/365 eliminating output variations Gartner

Estimated
30%-35%
Right shoring Scalability reduction in entry
Geographical independence Instant ramp up/down to match level-roles and an
without business case impact demand peaks and troughs increase mid-level
roles
Everest Group

Cost reduction of
Retention Audit trail
Shifts towards more stimulating Fully maintained logs essential
35 - 65%
tasks for compliance for onshore ops. &
10 -30%
for offshore ops.
Institute for Robotic Process

Accuracy Productivity Automation

The right result, decision or Freed up human resources for Estimated

calculation the first time higher value-added tasks
85% of a firm’s
900+ processes
can be automated.
Non-invasive technology 110 ~ 140m
Overlays existing systems. Allows for ongoing development of FTEs replaced by
sophisticated algorithms and machine-learning tools
2025
McKinsey
Intelligent Automation occurs along a spectrum of technologies, tools
and methods

Robotics process automation (RPA): Artificial Intelligence (AI): Other:

A software solution that runs unattended, Software-driven intelligence that mimics human Complementary technologies, tools and
working like a virtual employee with legacy cognition, behavior, and thought processing to architectures that can be combined with other
applications performing repetitive tasks reliably replicate more complex tasks that include layers on the spectrum to automate a business
at the UI level professional judgment and historical knowledge process or human experience

Comparing data sets Internet of

Machine learning
Things
Sensors
Composing and sending emails Deep learning
Computer vision Digital Conversational Agents
Automation of clicks, data entry
Natural language (chat bots)
Completion of auditable activity logs Processing
Natural Language Unmanned Aerial Systems
Reading, copying, aggregating data Generation (Drones)

Entering data into a system Neural Networks Macros

Rules-based processing and Predictive algorithms
decision making
What is Intelligent Automation?
Intelligent Automation
Human Activity
Robotics Process Automation
Execute and control a “process”
Advanced Analytics
Gather and manipulate
data Artificial Intelligence

Blockchain
Assess and analyse
Internet of Things
Make
decisions

Make coffee
…and where does Digital fit in?
Blockchain
Execute and
control a Robotics Process Automation
“process”
Artificial Intelligence

Make
Gather and
decisions & Digital (mobile & social media) manipulate
influence
data
actions

Internet of Things
Assess and
analyse

Advanced Analytics
Why the explosion of AI?

Availability of data Advances in

Explosion of AI = + + Packaged Algorithms
computing
AREAS OF APPLICATION
Security Finance Health Care

Data Security Personal Security Fraud Detection Health Care

Financial Trading

Online Marketing Smart

Natural Language Marketing

Online Search Processing Recommendations Personalization Smart Cars
Example branches of AI

Machine Learning Natural language processing

NLP deals with analysing and understanding the languages
Machine Learning is the field of study that gives computers
that humans use naturally in order to interface with computers
the ability to learn without being explicitly programmed
in both written and spoken contexts.

Supervised Learning
Building predictive models using
past observations &
classifications

Unsupervised Learning Deep Learning

Build a model which clusters data
Deep learning learns to recognize patterns in digital
without human input
representations of sounds, images, and other data
Example 1: Customer Debt / Loss of Revenue Control
Supervised learning - classification
 Example 1: Customer Debt / Loss of Revenue Control
Analytics vs AI
Rules based approach
New Sales Order
Order 123 (UGX145,500)
Customer XYZ
Machine learning approach
Training Data
All historic customer transactions:
- Invoice amount / type
- Customer / type / location
- Payment due date / actuals
Label: Did customer pay on time?
Human Written Rule
IF Customer A has outstanding debt
AND new order is > UGX100k
THEN block order
New Sales Order
Algorithm
Order 123 (UGX45,500)
Machine learning will analyse the
Customer XYZ
historic activity and learn
which characteristics can be used to Classification
predict whether a customer will pay for ► Order 123 has a high risk of not
their order on time, or not, or not pay at
being paid
all. It will then build a statistical model to
be applied to future orders. ► Block order, or change payment
terms to ‘pay immediately’
Example 2: Contract Risk
Natural language processing
Example 3: Text mining
Unsupervised learning & NLP
 Case Study: Artificial Intelligence
for Contract Review in Audit Natural Language
Processing
Knowledge
acquisition
Audit

The Challenge:
• EY performs tens of thousands of audits,
sometimes reviewing thousands of
different types of contracts per
engagement.
• Each contract may have up to 300 pages
and requires up to four hours to review
manually.
• Audit teams can improve efficiency by
retrieving clients’ contracts management
data base, but still have to reconcile data
fields with original contracts.
• How can artificial intelligence and
advanced language models improve the
identification and extraction of key data
fields from the various contract types we
audit?
Solution:
• We developed a product that ,Uses state of the art optical character recognition.
• Suggests data fields with 90% confidence , Eases validation of information by
EY audit team.
• Extracts data in a format readable by data analytics tools within the Real Estate
sector,
• Tool soon available for other documents and other sectors (as AI knowledge
library grows).
Outcome
• 24 data points managed with above 90% accuracy, improving quality of data
validation when compared to manual process
• Time to review lease contracts decreased by 60%, allowing EY audit teams to
focus on the higher value and more gratifying activities
• Tool designed for an easy-handling by audit teams, requiring minimal upfront
training
The challenge
Speed
 AI technology outpacing
regulation and guidelines
 Proof of concept and
‘agile’ development
compounds this
Cognitive solutions
market to be $72.2bn
in 2020-2027
Ubiquity Complexity Invisibility
 Breadth of adoption  Ever increasing  AI adopted through SaaS
increases likelihood of interactions between AI or purchased software
risk and other technologies  Unknown stakeholder
 Depth of adoption potentially leading to impact outside
increases impact unpredictable and organisation
untraceable outcomes
 Technology specific
assurance of limited
value
Illustrating the new risks through the example of machine learning

 Unexplainable
 Optimum algorithm not
 Inherent data bias selected  Lack of accountability
 Inadequate knowledge  Lack of consensus as to  Lack of clarity over
of source data what “good” looks like accuracy
 Data gaps  Absence of a ‘kill switch’
for high risk applications

Training
Data Model Output

Feedback
 Unintended feedback  Mutations caused by
loop malicious input
What did go wrong?
A criminal sentencing system in the US which used
predictions on re-offence to suggest sentences for
offenders was found to significantly under predict for
white offenders and over predict for black offenders

Twitter taught Microsoft’s AI chatbot

to be a foul mouthed Nazi in less
than 24hrs

LinkedIn and Facebook have both been accused of algorithmic bias in

the way they display job adverts to users. Facebook of age
discrimination and LinkedIn of displaying higher paid jobs more often
to men
What does this mean for existing assurance approaches?

 Assurance after the event increasingly invalid

From post to
 Impact of not assuring AI before the event will increase in line with the power entrusted to it
pre-assurance
 GDPR requires discrimination detection to be built in and not merely detected after the event

 What have we assumed remains constant for the assurance to stay valid?
From timely to  What ongoing monitoring is there that the assurance and assumptions remain valid?
time-limited
 What ongoing controls are there over evolution of systems?
assurance
 Are there any specific triggers that would cause to revisit or revise the assurance?

Independently  Black boxes are getting darker and harder to understand how an outcome was reached
generated  Generating an independent expectation and using this and appropriate questioning to
expectation of challenge and assure the output
behaviour
The role of ethics

Fundamentally we need to move beyond asking whether systems are doing things right to
asking whether they are doing the right things.

 With the proliferation of artificial intelligence the stakes are much higher with a lapse in
ethical behaviour whether intentional or unintentional having a much greater impact.

 Increased impact of artificial intelligence in areas such as health, privacy and

government

 Necessity to have principles that can guide us when rules and regulations lag behind
technology.

 Ethical assurance over artificial intelligence from conception to use, can help
organisations demonstrate integrity, gain trust and reduce their exposure to risk.
Why AI raises questions about Ethics and Trust

• Misleading anthropomorphic terminology (“Artificial Intelligence”, “Automated Decision-

Making”, “Machine Learning”)
 Responsibility remains with humans

• System complexity obscures human choices in the development and operation

 How to regulate “black-box” systems?

• AI based on statistical correlations is automating decisions without understanding

 Can such decision be legitimate? (e.g. criminal justice)

• Much publicly visible AI is associated with companies that commodify personal data
 Data Privacy debates have eroded trust in these actors
The importance of trust
Ethical drivers 3x more important to trust than competence

Percent of predictable variance in trust explained by each dimension

Competence: 24% Ethics: 76%

Ability 24

49 Integrity

Dependability 15

Purpose 12

Source: 2020 Edelman Trust Barometer.

Polling question GO TO ->

What do you see as the biggest use cases for

AI?
A B
Generating new revenue potential through
Process automation
new products and processes

C D

Risk management Customer service

E F

Client acquisition Proactive maintenance of physical assets

Other
What to Consider when Implementing AI projects ?

What is the business outcome you are looking to deliver?

Have you thought about the range of potential solutions to

deliver that business outcome before concluding AI is the
answer?

How will you build and maintain trust with your customers
and stakeholders?
Building human-centric, ethical AI

Accountable Unbiased

Incorruptible &
Transparent resilient

Inclusive & fair

Explainable &
Auditable

Predictable &
Reliable
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