The Financial Reporting Council has issued new guidance, the first from any audit regulator globally, for audit firms on using generative and agentic AI tools in audit engagements.
The guidance sets out how firms can mitigate risks to audit quality posed by these tools, while supporting firms to realise the significant benefits these technologies offer.
FRC stressed the guidance is not a response to identify quality deficiencies, but rather it codifies good practice, promote audit quality, builds confidence in the use of AI, and provides a conceptual foundation for future FRC work in this area.
Mark Babington, Executive Director of Regulatory Standards, said: “AI adoption in audit is accelerating, and agentic AI is expected to follow. This guidance is designed to help firms invest in these tools with confidence, safe in the knowledge they are managing risk effectively and maintaining the high standards the public expects, while leveraging the benefits of new technology. It is important to be clear, however, that while technology changes, the fundamental principle of our regulatory framework does not: it is people – the firms and Responsible Individuals – who are accountable for audit quality. AI is a powerful tool, but the professional judgement and accountability of the auditor remains at the core of how we regulate.”
See the full report at: https://media.frc.org.uk/documents/Generative_and_Agentic_AI_Guidance_crosPeBU.pdf
