In a paper for the May issue of the journal ‘IFRS in Practice’, Stanislav Antonov, Director of Audit for High-Tech Companies at FBK, looks into the UK Financial Reporting Council's (FRC) guidance on the use of generative and agentic AI in audit and assesses its impact on standard audit procedures.
The author clarifies why the risks of hallucinations, incorrect data interpretation, and deviations from methodology call for a new quality management system and a shift to a ‘human-in-the-loop’ model.
The paper features a case study in which it is being examined how AI systems independently analyse a large set of contracts for revenue recognition under IFRS 15, identify anomalies, assess risks, and form a target sample for the auditor.
‘The future lies in teamwork between humans and artificial intelligence, where the AI handles 80% of the routine and analytical work, while the human is the key decision maker and bears professional responsibility,’ the author points out.
Read the full article to learn how firms can structure their accounting data in advance, mitigate information quality risks, and prepare for this new type of audit effectively.
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