Module 1 of 2 · 45 minutes
AI and the five fundamental principles
By the end of this module you will be able to
- Name the five fundamental principles
- Apply confidentiality to the use of AI tools
- Apply professional competence and due care to AI assisted work
- Describe how AI can invent authorities, with a real example
- Recognise over reliance as a threat to objectivity
Work through it
1 interactive for this module, built on the WAJD Teach engine. Nothing moves until you ask it to, and every one has a written version if you would rather read it.
Watch: Emma and George talk it through
4 minutes. Captions are on, and the same conversation is written out in full below. The voices are computer generated.
Emma George, half my practice is using AI tools now and I've no idea whether we're allowed. Is there a rule?
George There's a Code, and it already covers it. Five fundamental principles. Integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.
Emma Those are decades old.
George They are, and in July 2025 ICAEW's Code was revised to add material on technology. It didn't invent a sixth principle. It made explicit that the five apply to the tools you use.
Emma So which one bites first?
George Confidentiality. It's the one most easily broken by a conscientious person in a hurry. A trial balance, a payroll file, a client's letter from HMRC. Paste it into a tool your firm hasn't approved and it's held on terms you never negotiated.
Emma Has anyone official said that?
George ICAEW has warned that putting client data of any kind into a public AI tool is a potential breach of confidentiality requirements.
Emma What if I strip the client's name out?
George Often not enough. A turnover, a sector and a town can identify a client. And where it includes employees or directors it's personal data too, so data protection law applies on top of the Code.
Emma Fine. Approved tools only. What about what comes back out?
George That's competence and due care. These tools produce plausible text. Ask for case law and you can get cases that look right in every respect and don't exist.
Emma That's actually happened?
George Harber against HMRC, First-tier Tribunal, December 2023. A taxpayer appealing a penalty relied on nine tribunal decisions. All nine had been generated by an AI tool. None was real. The appeal was dismissed.
Emma She wasn't a professional, though.
George No. But in October 2025 a large professional services firm agreed to refund part of its fee to the Australian government, after a report was found to contain AI generated errors, including references nobody could trace.
Emma So what's the standard?
George Understand the tool well enough to rely on it appropriately. For tax and legal statements, that means going to the legislation, the guidance or the decision itself. Every time.
Emma You mentioned objectivity. How does a tool threaten that?
George Two ways. Automation bias, accepting an output because the tool produced it. And using a tool whose working you don't understand well enough to explain its result.
Emma Is there a test?
George Yes. If someone asked why this figure, this classification, this conclusion, could you answer without saying the system produced it? If not, you're not yet in a position to sign.
Emma So the tool does the arithmetic.
George And you hold the responsibility. That stays with the person whose name is on the work.
The written material
The Code already covers it
Professional accountants work to five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. They come from the international code and are adopted by the UK bodies.
In July 2025 ICAEW's Code was revised to add material on technology. It did not create a sixth principle. It made explicit that the existing five apply to the tools you use, with new sections on professional competence, confidentiality and the ethical threats that arise from technology.
Confidentiality: what you paste has left the practice
Confidentiality is the principle most easily broken by a conscientious person in a hurry. A trial balance, a payroll file, a client's letter from HMRC: pasted into a tool the firm has not approved, it is now held on terms you did not negotiate. ICAEW has warned that putting client data of any kind into a public AI tool is a potential breach of confidentiality requirements.
Use only tools your firm has assessed and approved, for the purposes it has approved them for. And remember that a client is often identifiable from the figures alone. A turnover, a sector and a town can be enough.
Competence and due care: it can invent an authority
A generative tool produces plausible text. Asked for case law, it can produce cases that look right in every respect and do not exist. In Harber v HMRC, decided by the First-tier Tribunal in December 2023, a taxpayer appealing a penalty relied on nine tribunal decisions that turned out to have been generated by an AI tool. None was real. The appeal was dismissed.
The same thing happens to professionals. In October 2025 a large professional services firm agreed to refund part of its fee to the Australian government after a report was found to contain errors produced by generative AI, including references that could not be traced.
Professional competence and due care means understanding a tool well enough to rely on it appropriately. For tax and legal statements that means going to the legislation, the guidance or the decision itself, every time.
Objectivity: the tool you cannot explain
The Code asks you not to let undue reliance on technology compromise your judgement. Two threats are worth naming. Automation bias: accepting an output because the tool produced it. And a self-interest threat: using a tool whose working you do not understand well enough to explain its result to a client, a partner or a regulator.
The test is practical. If you were asked why this figure, this classification or this conclusion, could you answer without saying the system produced it? If not, you are not yet in a position to sign it.
Knowledge check
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The learning itself stays free and open. You are reading all of it right now without an account.
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