UK watchdog sets early benchmark for AI use in audit
The Financial Reporting Council (FRC) has published new guidance to support audit firms in deploying generative and agentic artificial intelligence (AI) tools, marking what it describes as the first guidance of its kind from an audit regulator globally.
Released on 30 March, the guidance sets out how firms can balance the significant efficiency and quality benefits of AI with the need to safeguard audit quality. Rather than responding to specific deficiencies, the FRC aims to codify emerging good practice, build confidence in adoption, and establish a foundation for future regulatory work as AI use accelerates.
A central focus is how auditors can obtain appropriate assurance over AI-generated outputs. The FRC outlines a principles-based framework, emphasising that the nature and extent of validation and oversight should depend on the specific tool and its application. Illustrative examples include the use of AI to summarise board minutes and to analyse contracts in support of revenue recognition testing.
Importantly, the guidance reiterates that responsibility for audit quality remains firmly with human auditors. Firms and Responsible Individuals are expected to ensure that AI deployment aligns with existing quality management requirements, including International Standard on Quality Management (UK) 1.
The need for guidance on AI use in audit highlights a broader shift towards embedding AI within reporting processes. As AI assistants improve, we expect to see further streamlining in reporting, although as ever, structured data supports AI tools to be as useful, efficient, and explainable as possible.
Read the guidance here.
