AI and Audit: What Impact Will New York’s AI Bias Law Have?

Ross Pounds

From January 2023, a new law in New York City centered around potential AI bias in systems used for hiring will come into effect. The law will require companies to conduct audits to assess biases in those systems, including along race and gender lines.

The relative newness of the AI audit process, added to the fact that clearly established guidelines don’t yet exist, has caused some consternation among Audit professionals. Concerns have been raised around the potential regulatory, reputational and operational risks that AI can introduce or heighten, not least running afoul of discrimination of protected classes or making suboptimal suggestions.


  • The city law will potentially impact a large number of employers. New York City in 2021 had just under 200,000 businesses according to the New York State Department of Labor

  • Nearly one in four uses automation, AI, or both to support HR activities, according to research that the Society for Human Resource Management published earlier this year. The number rises to 42% among companies with more than 5,000 employees

  • Although AI systems are free of the hidden motivations in a human mind (favoring a particular alma mater, for example), there remains concern about significant bias at scale, meaning that upcoming scrutiny is very much warranted


Ultimately, however, Audit professionals might see the introduction of the new law as an opportunity. Auditing AI doesn’t necessarily have to mean becoming an AI expert (finding the right tools to assist with audit can help immeasurably), and emerging technologies and trends (see ESG as well as AI) offer internal auditors the chance to leverage their broad understanding of the organization and their risk management expertise to claim a seat at the table when it comes to incorporating new technology into overall business strategies in a safe and sound manner.

Right now, the future of AI and audit holds more questions than answers. But it may well be the perfect opportunity for internal auditors to move away from a more reactive role and towards something more firmly embedded in the day-to-day functioning of their business.

For further detail on the intersection of technology and audit, take a look at our recent articles on how automation can help when it comes to carrying out a fraud audit and how automation can assist with internal audit controls testing.

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Ross Pounds
Ross Pounds, a Senior Manager at Diligent and expert in ESG, also has deep experience in governance, risk, audit and compliance. Ross has done extensive work on how organizations can prepare for climate accounting regulations and best achieve sustainability and diversity goals.