EY Shinnihon Introduces AI Agent for Financial Statement Risk Identification

Enhancing Financial Audit with AI: EY Shinnihon's Innovative Approach

In a significant move towards digitizing audits, EY Shinnihon has unveiled its AI agent, "UTB (Understanding The Business) Research," designed to streamline the identification of risks associated with financial statements. This innovative tool aims to automatically detect and document risk information derived from official reports such as securities filings and economic analyses, which may lead to misrepresentations in financial statements. By leveraging AI technology, what once took accountants several days to assess can now be accomplished in just hours, improving the overall efficiency and quality of the auditing process.

The roll-out of UTB Research is expected to significantly transform the auditing landscape for listed companies in Japan. Starting this month, around 700 listed firms will have access to the system, allowing auditors to capture vital risk information without the lengthy manual process that previously characterized these evaluations. The advancement signals a shift in how auditing firms can manage vast amounts of complex data while increasing accuracy and reducing the likelihood of oversight.

EY Shinnihon operates under a comprehensive auditing methodology that integrates international auditing standards with Japanese regulations. The AI agent is not just a standalone tool; it draws knowledge from experienced accountants and the unique auditing practices of EY. It identifies risk information based on various characteristics such as complexity, subjectivity, change, and uncertainty, thus evaluating how these risks could potentially impact specific accounts or disclosures in the financial statements. The findings generated by the UTB Research agent are cross-verified by accountants, who assess whether the identified information could indicate risks of financial misrepresentation.

This innovative approach allows auditors to keep their understanding up-to-date with relevant risks, reflecting necessary adjustments in their auditing plans. Furthermore, it facilitates better communication with the audited companies about identified risks, thereby enhancing the overall value of the audit process.

In addition to the focus on financial statement audits, EY Shinnihon is committed to further integrating AI technologies into various aspects of auditing. They plan to develop and implement additional AI agents for analyzing documents such as minutes, contracts, and audit records, along with automated data analyses, marking a comprehensive move towards the digital future of auditing services.

Ultimately, EY aims to create new value for clients, communities, and the planet while establishing trust in capital markets to contribute to a better society. Harnessing data, AI, and advanced technologies, EY's teams are dedicated to helping clients confidently shape the future, developing solutions for pressing current and future challenges. The expansive service coverage of EY includes assurance, consulting, tax, strategy, and transaction services, supported by extensive industry knowledge and a global network, facilitating service delivery in over 150 countries and regions.

As EY Shinnihon continues to innovate audit practices, the integration of advanced technology signifies a broader trend within the accounting industry, where AI and digital tools will redefine common practices, ensuring reliability and trust in financial reporting.