ARTIFICIAL INTELLIGENCE IN ACCOUNTING AND AUDITING: A REVIEW AT THE INTERSECTION OF MANAGEMENT SCIENCE AND ACCOUNTING & FINANCE

Abstract

AI is not merely an emerging trend in the accounting and auditing landscape but a transformative force that is increasingly becoming integral to the work of both professionals and firms.From its initial experimentation to full integration, AI is fundamentally changing the roles of accounting and auditing professionals. This review aims to summarize the latest research available in the literature and industry reports from 2020 to 2026 to explore the current state of AI within accounting and auditing. Machine learning, natural language processing, robotic process automation, and massive language models are the four main technology areas that are highlighted in the analysis. Each of these is assigned to financial reporting, fraud detection, audit planning, continuous auditing, and management accounting. There are clear and quantifiable gains to be seen: The number of accounting firms using AI increased from 9% in 2024 to 41% in 2025, with 77% of the firms stating that they intend to invest more in AI (Wolters Kluwer, 2025). Clara AI platform by KPMG lowered weekly hours of auditors by 18% and had the lowest PCAOB auditor deficiency rate of 20% among the Big 4 firms (Siano et al., 2026.Continuous auditing using LLM has decreased extraction accuracy by 97% and cross-verification time by 83%. ( Zhang et al., 2026). There are, however, significant challenges in the adoption process, such as lack of skills, data privacy issues, algorithmic biases, regulatory ambiguities, and professionals' doubts about the autonomy of artificial intelligence (Abdo-Salloum & Chehade, 2026; Kassar & Jizi, 2026). The review finds that ai is best used as a tool to support and enhance human decision-making, rather than to supplant it, and outlines key research areas that need further development, such as fine-tuning AI models with domain-specific data, hybrid human-AI systems, explainable AI outputs, and ethical governance frameworks. With a review being situated at the intersection of Management Science and Accounting & Finance, it brings together theoretical approaches from decision sciences, organizational theory and financial regulation.