The six biggest UK accounting firms are using AI tools but aren’t tracking how these affect audit quality, the Financial Reporting Council (FRC) found.
The FRC’s first AI guide revealed Deloitte, EY, KPMG, PwC, BDO, and Forvis Mazars rely on AI for risk assessments and evidence gathering. Yet, the firms mainly monitor tool usage for licensing, not quality impact.
Some firms use machine learning and even generative AI like chatbots, though bots weren’t part of the review. 
All except one lack key performance indicators (KPIs) for their AI tools. This follows FRC concerns over BDO and Forvis Mazars’ repeated audit failures.
EY is spending $2 billion since 2021 to boost audit quality after fraud scandals like Wirecard.
KPMG UK uses AI to scan millions of transactions for relevant spots, something traditional methods can’t match. Deloitte’s teams use AI for summarizing board minutes and extracting contract details.
The FRC warns AI brings “risks and challenges” including bias and ethical issues. It’s pushing firms to set metrics that prove AI improves audit results.
Since the review, firms started improving tool oversight. KPMG’s Emily Jefferis called quantifying impact “subjective” but said:
> We carefully monitor the adoption of all our tools using a range of KPIs and have the aim of putting AI in the hands of every auditor for use in every engagement. We are currently close to that target.
The FRC’s report arrives as Big Four firms race to audit the effectiveness of clients’ own AI tools – a new revenue angle like ESG assurances.
