AI Audit Tool Guidance for Audit Firms

FRC News

Published March 30th, 2026

Detected March 30th, 2026

Summary

The Financial Reporting Council (FRC) published guidance for UK audit firms on using generative and agentic AI tools in audit engagements. The guidance provides a framework for obtaining appropriate confidence in AI tool outputs while maintaining human accountability for audit quality. This is the first guidance of its kind from any global audit regulator and the FRC's second document on AI in audit.

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The FRC issued guidance on managing risks from generative and agentic AI tools in audit work, marking the first such guidance globally from any audit regulator. The document establishes a conceptual framework for obtaining confidence in AI tool outputs and includes illustrative examples such as summarising board minutes and reviewing contracts for revenue recognition testing. Key provisions clarify that regulatory accountability for AI deployment and audit output quality remains unchanged; human auditors retain full accountability as set out in auditing standards.

Audit firms should review the guidance to understand the FRC's expectations for AI tool governance. Firms are encouraged to consider how their AI tool deployment aligns with their quality management obligations under ISQM (UK) 1. While the guidance is non-binding and not triggered by identified quality deficiencies, it codifies good practice and provides a foundation for future FRC work in this area. Firms adopting or planning to adopt AI tools can use this guidance to manage associated risks while leveraging efficiency and quality benefits.

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Innovative new guidance supports audit firm adoption of emerging AI technologies

News types: Guidance

Published: 30 March 2026

The Financial Reporting Council (FRC) has today published guidance 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 - including improvements to the quality and efficiency of audit work.

Published in response to engagement with the market, and to support firms as they continue to adopt generative and agentic AI at pace, the guidance is the first from any audit regulator globally, and the second the FRC has issued on the use of AI in audit. It is not a response to identified quality deficiencies, rather it codifies good practice, promotes audit quality, builds confidence in the use of these technologies, and provides a conceptual foundation for future FRC work in this area.

The guidance offers a framework for thinking about how appropriate confidence in the quality of AI tool outputs can be obtained. It recognises that the nature and extent of mitigating activities is a matter of professional judgement that will vary depending on the tool and its intended use.

At a glance: Generative and Agentic AI Guidance – what and why?

The guidance also contains illustrative examples to support firms in applying the guidance to real-world scenarios, including summarising board minutes and using an AI tool to review contracts for revenue recognition testing.

Firms and Responsible Individuals should note that regulatory accountability for the deployment of AI tools and the quality of audit outputs remains unchanged. As set out in auditing standards, the human auditor is always accountable - this guidance does not alter that position. Firms are encouraged to consider how their use of AI tools fits within their wider quality management obligations under ISQM (UK) 1.

"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."

Mark Babington, Executive Director of Regulatory Standards
Read the guidance

At a glance: Generative and Agentic AI Guidance – what and why?