The global auditing profession is undergoing a profound transformation driven by the rapid integration of Artificial Intelligence (AI). While AI promises enhanced efficiency, deeper data analysis, and improved risk assessment, its implementation is fraught with challenges, particularly in developing economies. This conceptual paper examines the critical factors influencing the adoption of AI within Malaysia's auditing sector. Through a synthesis of current literature and industry reports, we identify and analyze three primary dimensions: (1) technological advancement and infrastructure, (2) workforce digital competency and readiness, and (3) ethical and regulatory considerations. The analysis reveals that while top-tier firms in Malaysia are progressing with AI adoption, a significant implementation gap exists due to a shortage of technical skills, unclear impact on audit quality, concerns over job displacement, and an underdeveloped regulatory framework. The paper concludes that a synergistic approach is essential for bridging the gap between AI's potential and its practical application. Key recommendations include curriculum modernization by academic and professional bodies, the development of robust AI governance standards by regulators, and a strategic shift within firms towards a collaborative human-AI audit model. This study contributes to the emerging discourse on technology in auditing by providing a focused conceptual framework for understanding the unique socio-technical barriers and facilitators of AI implementation in the Malaysian context.
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