The Financial Reporting Council (FRC) has identified that major accounting firms are failing to adequately monitor the impact of artificial intelligence on audit quality. A recent thematic review revealed that some firms lack sufficient performance indicators for the automated tools they employ.
The FRC's findings highlight a need for improved governance and documentation surrounding the use of AI in auditing. The council has released new guidance aimed at clarifying expectations for the appropriate documentation of AI tools, emphasising the importance of responsible deployment to enhance audit quality and maintain market confidence. The FRC stresses that while its guidance is comprehensive, it is not prescriptive and does not introduce new regulatory requirements.
