As the introduction of artificial intelligence (AI) gains speed in the accounting industry, financial authorities signaled improvements to the current system that rates audit quality by audit hours invested.
Ryu Seong-jae, head of the accounting system team at the Financial Services Commission, said at the Accounting Trend Symposium on the 27th that, regarding the recent spread of AI adoption in the accounting industry, "The standard audit hours system is basically designed on the premise that audit quality is proportional to the audit hours invested, but as the use of AI increases, audit hours are expected to decrease, and the scope of review and detection capabilities will also be strengthened through AI," adding, "We need to consider whether it is necessary to continue maintaining the current standard audit hours system centered on audit time."
However, "While AI adoption reduces time spent on simple information processing, the time that professionals spend verifying AI-generated data may actually increase," adding, "We need to comprehensively compare and review the time saved by reducing manual work and the additional time required for verification."
The standard audit hours system was first introduced in 2019. It was introduced in the wake of the large-scale accounting fraud at Daewoo Shipbuilding & Marine Engineering, and is aimed at setting the minimum time that must be audited based on corporations' size, number of affiliates, industry, and other factors.
The intent is to maintain minimum audit quality by setting the minimum audit hours that an accounting firm conducting a corporation's audit must invest. In the initial phase, it operated as a set of guidelines, but it is now applied as a recommended provision under the guidelines of The Korean Institute of Certified Public Accountants.
As the accounting industry and corporations are actively introducing AI technology, it means the authorities overseeing such systems are increasingly concerned as well.
Kim Beom-jun, a professor in the Department of Accounting at the Catholic University, said, "Many accounting firms are currently pursuing automation and increasing investment so that simple judgments can be made through AI," explaining, "We are now in a transitional stage where, by collaborating with AI, we reduce time spent on simple repetitive tasks and devote more time to judging exceptions." Kim added, "If AI technology becomes more advanced and comes into the institutional framework, the rules themselves—the audit standards—will have to change."
However, some say that discussion among various stakeholders must come first before overhauling the system. An accounting professional in the audit institutional sector said, "There is actually a need to further increase audit hours," explaining, "Even now, contracts are made on an hourly basis, and there are many cases where firms contract with corporations at low prices, which adds to the workload."
Another industry official said, "If standard audit hours are further reduced, an environment capable of using AI to that extent must be in place, but there will not be many accounting firms with such an environment," adding, "If audit hours decrease, it could become advantageous only from the perspective of corporations, which can gain bargaining power and save expense."
At this point, there is strong sentiment that even discussing a systemic overhaul is premature. While the accounting industry is actively adopting AI, it still remains in the phase of system setup and refinement, which has, in turn, increased the workload and time for senior-level accountants.
An industry official said, "Among accountants, there are even comments that, at present, the time spent on performing work has actually increased because they have to check the data obtained through AI, make judgments, and verify it."