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The Financial Reporting Council has issued guidance for audit firms using generative and agentic AI, establishing a framework to mitigate risks while maintaining audit quality.
The guidance is the first of its kind from a global audit regulator and focuses on the deployment of emerging autonomous agentic technologies alongside generative models.
It provides a conceptual foundation for obtaining confidence in AI outputs, emphasising that the extent of risk mitigation remains a matter of professional judgment.
Illustrative examples within the text include the use of AI for summarising board minutes and reviewing contracts for revenue recognition testing. The FRC stated that the guidance codifies existing good practice rather than responding to identified quality deficiencies.
A central tenet of the publication is that regulatory accountability remains unchanged; human auditors and responsible individuals are held accountable for the final audit quality regardless of the tools used.
The guidance also identifies that while AI can improve the efficiency of data-heavy tasks, however, it does not replace the requirement for professional skepticism and the application of auditing standards.
The FRC intends for this document to build market confidence and provide a basis for future regulatory work as adoption speeds increase.
By setting out clear expectations for the oversight of agentic AI, tools capable of making independent decisions to achieve goals, the regulator aims to prevent the erosion of audit standards.
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, knowing they are managing risk and maintaining standards, while leveraging technology.
“It is important to be clear, however, that while technology changes, the principle of our regulatory framework does not: it is people, the firms and responsible individuals, who are accountable for audit quality. AI is a tool, but the professional judgment of the auditor remains at the core of how we regulate.”
