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The UK regulator of the audit profession, the Financial Reporting Council (FRC), has published guidance on the use of AI by the audit profession. Highlighting the risks, mitigations, and examples.
The FRC’s guidance highlights that AI tools “pose risks to audit qualityâ€, as well as the danger of deficient results, including hallucinations and data distortions, that could lead auditors to reach inappropriate conclusions.
It is reported that Mark Babington, executive director of regulatory standards at the Financial Reporting Council (FRC), was unequivocal on the matter of responsibility. “You can’t blame it on the box,†he said. “If you use this technology, you are still accountable for it.â€
The FRC also highlighted that Despite widespread anxiety about AI displacing audit professionals, Mr Babington cautioned against excessive alarm, describing too much “hand-wringing and panic†over job losses. Auditing, he argued, remained “still reliant on really good, professionally sceptical judgementâ€.
In our own experience, when you align AI, audit, and assurance together. AI acts as a force multiplier for audit, enabling a more efficient and effective process and allowing auditors to conduct audit and assurance work they would otherwise not be able to. That’s an important consideration in an increasingly regulated world.
As we have seen recently with reports about Delve and the alleged issues with providing assurance certifications with ISO 27001 and SoC2 reports. Audit process, quality, and delivery aligned with audit standards are critical to corporate compliance, going as far as to impact capital markets and increasingly drive corporate governance, legal, and regulatory compliance assurance.
Liz Sandwith CFIIA Ryan Buckner
@Parava Security Solutions IIA-The Institute of Internal Auditors
#internalaudit #cybersecurity #corporategovernance
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