Challenges and opportunities of artificial intelligence in public sector auditing: a systematic literature review

Riva, P and Dom, BK ORCID: https://orcid.org/0000-0002-0889-2571, 2025. Challenges and opportunities of artificial intelligence in public sector auditing: a systematic literature review. In: International Research Society in Public Management Conference 2025 (IRSPM 2025), Bologna, Italy, 07-09 April 2025.

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Abstract

Artificial Intelligence (AI) has evolved from a buzzword into a pivotal element in current time, yet its definition remains contentious, revealing significant gaps in understanding its unique characteristics (Samoili et al., 2021). Coined by John McCarthy in 1956, the term ‘Artificial Intelligence’ has sparked ongoing debates regarding its scope and implications. The OECD (2024) defines AI as machine-based systems that make predictions, suggestions, and judgments to achieve human-specified objectives. This definition is particularly relevant in the context of auditing, where AI could enhance the auditor’s role in providing quality independent opinions.

AI has been integrated into the operations of audit by leading auditing firms (i.e. Deloitte, EY, KPMG, and PwC) to scrutinise Public Sector Financial Information (PSFI). Despite the increased integration of AI into auditing processes, users and stakeholders have raised concerns about potential biases (Patel and Uddin, 2022), which often undermine the intended aims to promote accountability and transparency in the public sector. While there has been some progress, the transition from traditional practices to AI-driven systems in auditing remains slow. Although recent studies (e.g. Zhang et al., 2020) highlight the effectiveness of AI in automating tasks like invoice entry and financial reporting, literature has been so far limited on the role played by AI in public sector auditing practices.

The aim of this research paper is to address this gap through a systematic literature review, where we investigate the current state of AI in this domain, identifying both the opportunities it presents and the barriers to its adoption. Our research question focuses on how AI can be effectively integrated into auditing practices to enhance transparency and ensure the quality of PSFI.

By exploring this research gap, we contribute unique insights into the implications of AI for auditing in the public sector. Indeed the study identifies gaps in current literature on digital transformation and technological adoption in public administration stimulating further academic inquiry into specific aspects of AI in auditing, such as ethical considerations, governance models, and the impact on audit quality. This is also expected to further support the development of theoretical frameworks that explain the dynamics of AI integration in public sector auditing. Additionally, the research findings may encourage collaboration between disciplines, such as accounting, information technology, and public administration, fostering a more holistic understanding of AI's role in the public sector. The research is also expected to serve as a foundation for future empirical studies, providing a basis for testing the effectiveness of AI applications in auditing of PSFI and their impact on accountability and transparency of public sector organizations. The systematic analysis of the academic discourse that examines the implications of AI in public sector auditing also provides insights beneficial for policy recommendations that enhance governance and oversight in public sector financial management.

Item Type:	Conference contribution
Creators:	Riva, P. and Dom, B.K.
Date:	8 April 2025
Identifiers:	Number Type 2425634 Other
Divisions:	Schools > Nottingham Business School
Record created by:	Melissa Cornwell
Date Added:	14 Apr 2025 13:23
Last Modified:	14 Apr 2025 13:23
URI:	https://irep.ntu.ac.uk/id/eprint/53402

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