FRC TASKS AUDITORS, REGULATORS ON RESPONSIBLE AI USE

The Financial Reporting Council has urged auditors, regulators, and other professionals in the financial reporting ecosystem to adopt artificial intelligence responsibly as the technology becomes increasingly integrated into business operations.

The council said AI could improve efficiency, data analysis, risk assessment, and other aspects of financial reporting and auditing when properly deployed.

However, it stressed that professionals must maintain appropriate oversight and ensure that AI-generated outputs are properly reviewed before they are relied upon for important financial decisions.

The FRC noted that issues around data privacy, accuracy, transparency, bias, cybersecurity, and accountability must be considered when organisations deploy AI systems.

Auditors were encouraged to develop the skills needed to understand AI tools and assess the risks associated with their use by companies and audit clients.

Regulators, the council said, also have an important role to play in developing appropriate guidelines that promote innovation while protecting the integrity of financial reporting.

Industry experts said responsible AI adoption could help organisations reduce manual workloads and improve the speed of financial analysis, but excessive reliance on automated systems could create new risks.

They urged companies to establish clear internal controls around AI use, including human review, data governance, access controls, and documentation of AI-assisted processes.

The FRC also called for continuous training to ensure that auditors and other professionals remain equipped to assess emerging technologies and their impact on financial reporting.

Stakeholders said collaboration among regulators, auditors, technology experts, and businesses would be necessary to develop practical standards for responsible AI adoption.

The council reaffirmed the need for innovation to be balanced with accountability as organisations increasingly incorporate AI into their operations.

It said responsible use of AI would be essential to maintaining trust, transparency, and confidence in Nigeria’s financial reporting and regulatory environment.