UK audit regulator issues guidance on using AI in audits

In short: The UK’s audit regulator has published new guidance on how auditors should use AI, with a focus on human oversight and clear records.

What happened

The Financial Reporting Council (FRC), the body that oversees audit standards in the UK, published guidance on June 26, 2025 about using AI in audits. Audits are checks on a company’s financial statements, like an independent review to see if the numbers look reliable.

The guidance is not a new rulebook. The FRC says it is “non-prescriptive,” meaning it does not force firms to use any specific tool or method. Instead, it sets out a clear approach for using AI-enabled tools, including tools that help auditors look for unusual accounting entries, such as journal entries (the line-by-line records companies use to log money moving in and out).

A central message is that people must stay responsible for the work. The FRC says AI can support audit quality, but auditors need human oversight, and they should keep documentation that shows what the tool did, what checks were done, and who signed off. Think of it like using a calculator for a long set of sums, it can speed things up, but you still need a person to sanity-check the answer.

The guidance applies whether the AI tool is built inside an audit firm or bought from an outside provider. It also spells out documentation expectations for auditors, central teams, and technology providers.

Why it matters

More audits are starting to use AI as it moves from testing to everyday work. The FRC is signaling that firms can try new tools, but they must be able to explain and evidence their decisions, which can help maintain trust in financial reporting.

Source: Financial Times