The Role of Artificial Intelligence on Internal Controls and Compliance

In the realm of modern business operations, where data reigns supreme and regulatory scrutiny is ever-increasing, the role of artificial intelligence (AI) in bolstering internal controls and compliance mechanisms has become paramount. With its ability to analyse vast amounts of data, detect patterns, and make decisions with minimal human intervention, AI offers a transformative solution to the challenges faced by organisations in ensuring adherence to regulations and maintaining robust internal control systems. 

Traditional vs. AI processes in internal controls

Traditional approach

In the traditional approach to internal controls, organisations rely heavily on manual processes and periodic audits to ensure adherence to regulations and maintain control systems. Tasks such as data collection, analysis, and risk assessment are often performed manually, consuming significant time and resources. Periodic audits conducted by human auditors serve as the primary means of evaluating compliance and identifying control deficiencies. However, these audits are often time-consuming, prone to human error, and may fail to capture emerging risks or changes in regulatory requirements in real-time.


AI-powered approach

In contrast, AI-powered processes offer multifaceted benefits to organisations:

  • AI algorithms excel at sifting through vast amounts of data to swiftly identify unusual transactions, including unnoticed credit card activities, facilitating prompt risk mitigation.
  • AI assists in mapping out risk registers and proposing mitigation actions, enabling dynamic analysis and profound insights into identified risks.
  • AI solutions can flag incidents in real-time and provide actionable steps for rapid operational risk management, such as automatically reviewing transactions for compliance with spending policies or regulatory requirements.
  • AI’s capability to ingest and analyse both internal and external data sources enables organisations to maintain compliance with evolving regulations.
  • AI-powered analytics furnish organisations with timely data feeds on emerging industry risks, enabling proactive adaptation of strategies and maintaining a competitive edge, thereby enriching their overall risk management framework.


  • Efficiency: AI processes streamline internal controls and compliance activities, reducing the time and resources required compared to traditional manual methods.
  • Accuracy: AI-powered algorithms offer greater accuracy and consistency in data analysis and risk detection compared to human-based approaches, minimising the risk of errors and false positives.
  • Real-time Insights: AI enables real-time monitoring and detection of deviations, providing organisations with timely insights to address issues promptly, whereas traditional methods may lag in identifying emerging risks.
  • Scalability: AI technologies are highly scalable, capable of handling large volumes of data and adapting to changing business needs, whereas traditional processes may struggle to cope with increasing data complexity and volume.
  • Predictive capabilities: AI-driven predictive analytics forecast future risks and trends, empowering organisations to anticipate and mitigate potential threats proactively, a capability lacking in traditional approaches reliant on historical data analysis.
  • Resource allocation: AI enables more efficient resource allocation by identifying high-risk areas and prioritising mitigation efforts, optimising resource utilisation compared to traditional methods that may rely on subjective assessments or periodic audits.

Recommendations for adopting AI in internal controls 

  • Strategic alignment: Align AI adoption with organisational objectives, focusing on areas where AI can deliver maximum value, such as automating repetitive tasks, enhancing risk management, and fortifying compliance mechanisms.
  • Data quality and accessibility: Invest in data quality initiatives to ensure that AI algorithms receive accurate and reliable data inputs. Establish robust data governance frameworks to maintain data integrity and accessibility across diverse sources, enabling AI applications to operate effectively and deliver meaningful insights.
  • Collaborative approach: Foster collaboration between business units, IT teams, and compliance professionals to ensure a holistic approach to AI implementation, encompassing technical expertise, regulatory insights, and business acumen.
  • Continuous learning and improvement: Embrace a culture of continuous learning and improvement, investing in AI talent development and staying abreast of advancements in AI technologies and regulatory requirements.
  • Ethical considerations: Prioritise ethical considerations and establish robust governance frameworks to guide the responsible use of AI in internal controls and compliance. Ensure transparency, fairness, and accountability in AI-driven decision-making processes, adhering to ethical principles and regulatory standards to maintain trust and integrity.
  • Evaluation and adaptation: Continuously evaluate the efficacy of AI applications in internal controls and compliance, soliciting feedback from stakeholders and iterating on processes to optimise outcomes and address emerging challenges.

Overcoming challenges and maximising benefits

AI represents a powerful ally in the quest for effective internal controls and compliance management. While the potential benefits of AI in internal controls and compliance management are substantial, organisations must address several challenges to realise these benefits fully. Data privacy and security concerns, algorithmic bias, regulatory constraints, and the need for skilled personnel to develop and manage AI systems are among the key challenges that organisations must navigate.

To overcome these challenges and maximise the benefits of AI, organisations should adopt a strategic approach to AI adoption, starting with a comprehensive assessment of their compliance needs, data infrastructure, and organisational capabilities. Additionally, organisations should invest in robust data governance frameworks to ensure the ethical and responsible use of AI technologies, while also prioritising the development of AI-related skills among their workforce.

Scroll to Top