Module 2 of 2 · 45 minutes
Review, evidence and what to tell the client
By the end of this module you will be able to
- Review AI assisted work in proportion to what depends on it
- Keep evidence of how a conclusion was reached
- Describe what the FRC's guidance asks of audit firms
- Decide what to tell a client about the use of AI
- Explain which duties AI does not change
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
3 minutes. Captions are on, and the same conversation is written out in full below. The voices are computer generated.
Emma George, last time was the principles. Now the practical bit. How much do I have to check what these tools produce?
George In proportion to what depends on it. A draft email to a client needs a read. Transactions categorised by a tool need a sample checked, more where it was unsure or the amounts are large.
Emma And figures?
George A figure that goes into accounts or a return gets traced to its source. A statement of tax or law gets checked against the legislation or guidance.
Emma Any warning signs?
George Round, tidy, convenient answers. And anything the tool couldn't have known. A client's circumstances it was never told. A rule that changed after it was built.
Emma Say a client disputes something next year. What do I show them?
George How the conclusion was reached. And a tool's output alone isn't evidence, because the same question may give a different answer tomorrow. So record what you asked, what it produced, what you checked it against, and what you changed.
Emma Has the regulator said anything?
George The Financial Reporting Council has, for audit firms. Guidance on AI in audit in June 2025, with documentation guidance. And on 30 March 2026, guidance on generative and agentic AI.
Emma What's the gist?
George That how much you validate and oversee should depend on the tool and how it's used. And that you need appropriate confidence in an output before you rely on it. It's audit guidance, but it's a sensible standard for anyone whose work may be reviewed.
Emma I've seen working papers that just say per AI tool.
George That isn't a working paper. Say what was checked, against what, and by whom.
Emma Do I have to tell clients?
George There's no single rule that says always. But integrity and professional behaviour point towards openness, especially where AI did research or analysis they're relying on.
Emma Some of mine would object.
George Which is why you deal with it in advance. Put it in the engagement letter. Whether and how you use AI tools, what happens to their data, and that the work's reviewed by a qualified person. And check your indemnity cover while you're at it.
Emma Is there anything AI doesn't change at all?
George Plenty. Anti money laundering is still yours. A tool may help screen a client, but due diligence, monitoring and the decision to report a suspicion stay human. Tipping off is still an offence.
Emma And tax returns?
George The taxpayer's, and you remain responsible for the care you take as agent. Data protection applies as before. And where a tool shapes a decision about a person, like credit, UK rules revised in February 2026 give them a right to human intervention.
Emma So the short version.
George No regulator accepts the software did it. If the duty was yours before the tool arrived, it's yours now.
The written material
Review in proportion
Not all AI assisted work needs the same scrutiny. Decide by what depends on it. A draft email to a client needs a read. Transactions categorised by a tool need a sample checked, with more checking where the tool was unsure or the amounts are large. A figure that goes into accounts or a return must be traced to its source. A statement of tax or law must be checked against the legislation or guidance.
Be suspicious of round, tidy and convenient answers, and of anything the tool could not have known: a client's circumstances it was never told, or a rule that changed after it was built.
- Draft correspondence: read it
- Categorised transactions: check a sample, more where it matters
- Figures in accounts or returns: trace to source
- Tax and law: check the legislation or guidance
Keep the evidence
If a conclusion is challenged in a year's time, you need to show how it was reached. A tool's output on its own is not evidence, because the same question may produce a different answer tomorrow. Record what you asked, what it produced, what you checked it against, and what you changed.
The Financial Reporting Council has published guidance for audit firms: in June 2025 on AI in audit, with documentation guidance and an illustrative example, and on 30 March 2026 on generative and agentic AI. Its theme is that the extent of validation and oversight should depend on the tool and how it is used, and that auditors need appropriate confidence in an output before relying on it. That is audit guidance, and it is a sensible standard for anyone whose work may be reviewed.
What to tell the client
Integrity and professional behaviour point towards openness. Where AI has done research or analysis that the client is relying on, being honest about that matters, and ICAEW's guidance says so. Clients differ: some will not mind, some will want to know which tools hold their data, and some will object.
The tidy way to deal with it is in advance. Say in the engagement letter whether and how AI tools are used, what happens to the client's data, and that the work is reviewed by a qualified person. Check your professional indemnity cover as well, and tell your insurer how you use these tools if your policy asks.
What AI does not change
Anti money laundering duties are the firm's and the individual's. A tool may help screen a client, but customer due diligence, ongoing monitoring and the decision to report a suspicion remain human responsibilities, and tipping off is still an offence.
Tax returns are the taxpayer's, and an agent who prepares one remains responsible for the care taken. Data protection law applies to client and employee data as before. And where a tool makes or shapes a decision about a person, such as a credit decision, UK rules on automated decisions, revised in February 2026, give that person the right to human intervention.
Knowledge check
The knowledge check and your certificate need a free account, so that your progress and results can be saved as evidence.
The learning itself stays free and open. You are reading all of it right now without an account.
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