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.
Mark Babington, Executive Director of Regulatory Standards"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."