Building a Better Auditor: The Powerful Synergy of EQ and AI

The rapid rise of artificial intelligence (AI) has wide-ranging implications for businesses across the globe. While the speed at which individuals and organizations adopt AI understandably varies, few doubt the dramatic impact it will have on the future of work.

AI is transforming the scope and operation of internal auditing. It can process vast amounts of data at speeds and accuracies unattainable by human auditors, enabling more comprehensive risk assessments, fraud detection, and regulatory compliance checks. For instance, machine learning algorithms can identify patterns and anomalies in financial data that might indicate fraudulent activities, alerting auditors to potential risks sooner. AI's ability to automate routine tasks enables auditors to focus on more complex and judgment-intensive areas, engaging in more meaningful and strategic work.

In the face of this rapid change, internal auditors are collectively figuring out how to best manage and mitigate the risks stemming from the use of AI in their engagements. At the same time, they need to ensure they possess the necessary technological fluency to navigate the evolving landscape of automation with confidence and integrity well into the future.

I believe the profession would benefit from embracing the ways in which emotional intelligence, also known as EQ, can help address the complexities and risks inherent in adopting AI.

Emotional intelligence refers to the ability to perceive, control, and evaluate emotions. The core components of emotional intelligence — self-awareness, self-management, social awareness, and relationship management — are hallmarks of any effective internal auditor. These components aid in building strong relationships with colleagues and stakeholders. Auditing is not just about risks and compliance; it's about understanding the motivations and behaviors of the people behind the roles. Auditors with high EQ can navigate sensitive situations and communications, fostering cooperation that can lead to more candid disclosures and valuable insights.

In the evolving business and finance landscape, internal auditors confront a challenging environment that demands both technical acumen and advanced interpersonal skills. In this environment, EQ is an essential tool for incorporating AI within internal audit.

The combination of EQ and AI has the potential to create a powerful synergy that leverages the strengths of both human and machine. While AI provides tools for enhanced data analysis and automation, EQ ensures these tools are used effectively within the human-centric realms of business. The risks of leveraging AI in audits, including data privacy and lack of transparency, can be managed by auditors with highly developed EQ. These auditors foster trust and promote ethical decision-making through nuanced communication.

For example, AI might identify a potential compliance issue, but the internal auditor’s emotional intelligence is essential to determine how to best communicate this finding to management constructively and non-confrontationally. Similarly, when AI suggests solutions based on broad data sets, emotionally intelligent auditors can assess these suggestions in the context of organizational culture and stakeholder dynamics.

Given the importance of both EQ and AI, internal auditing training programs are increasingly incorporating elements of both. Emotional intelligence training focuses on improving soft skills such as empathy, leadership, and communication, while technology education for auditors is expanding to include AI tools and data analytics.

While emotional intelligence and artificial intelligence may seem like disjointed aspects of an internal auditor’s toolkit, they are two sides of the same coin.

Organizations that foster a culture embracing the development of both emotional intelligence and artificial intelligence capabilities in their auditing functions have the potential to experience enhanced compliance, better risk management, and improved organizational health.

Sabine Charles will present The Integration of EQ and AI in Auditing at The IIA’s 2024 International Conference in Washington, D.C., taking place July 15-17.