# AI in accounting and finance: ethics, evidence and the client

*What the Code of Ethics asks when AI helps with the work, how to review it, and what to tell clients.*

## Production summary

- Modules to record: 2
- Total script: 899 words, about 6 minutes of finished audio
- Voices: Emma (host) and George (practice educator)
- Level: Bookkeepers, accountants, tax advisers, finance teams and practice managers

## Accreditation wording that must appear in the description

- **The CPD Certification Service** (planned): Application scheduled.
- **ICAEW Code of Ethics** (aligned): Written against the published Code, including the technology related revisions effective July 2025. Our own mapping, with no endorsement from ICAEW implied. Other bodies' codes follow the same international standard but differ in detail.
- **Financial Reporting Council guidance on AI in audit** (aligned): Written with reference to the FRC's published guidance of June 2025 and March 2026. Our own mapping, with no endorsement from the FRC implied.

> Do not upgrade any of these words in a description or a thumbnail. Aligned is not accredited, and planned is not approved.


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## AI and the five fundamental principles

**Runtime** about 3 minutes. **Words** 436. **Starts at** 00:00 in the full course recording.

### Learning outcomes to state on camera

- 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

### Script


`[CUE 1]` *Five principles as five pillars, with a new technology panel fixed across them dated July 2025*

**EMMA**  [00:00]
George, half my practice is using AI tools now and I've no idea whether we're allowed. Is there a rule?

**GEORGE**  [00:08]
There's a Code, and it already covers it. Five fundamental principles. Integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.

**EMMA**  [00:16]
Those are decades old.

**GEORGE**  [00:18]
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.


`[CUE 2]` *A payroll file leaving a practice into a public tool, with identifying details still visible after the name is removed*

**EMMA**  [00:31]
So which one bites first?

**GEORGE**  [00:33]
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**  [00:50]
Has anyone official said that?

**GEORGE**  [00:52]
ICAEW has warned that putting client data of any kind into a public AI tool is a potential breach of confidentiality requirements.


`[CUE 3]` *A tribunal decision listing nine cases, each stamped does not exist*

**EMMA**  [01:01]
What if I strip the client's name out?

**GEORGE**  [01:04]
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**  [01:18]
Fine. Approved tools only. What about what comes back out?

**GEORGE**  [01:22]
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.


`[CUE 4]` *A professional checking a generated statement against the legislation itself*

**EMMA**  [01:33]
That's actually happened?

**GEORGE**  [01:34]
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**  [01:48]
She wasn't a professional, though.

**GEORGE**  [01:50]
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.


`[CUE 5]` *A signed set of accounts with the question why this figure and a person answering it*

**EMMA**  [02:04]
So what's the standard?

**GEORGE**  [02:06]
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**  [02:17]
You mentioned objectivity. How does a tool threaten that?

**GEORGE**  [02:21]
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**  [02:32]
Is there a test?

**GEORGE**  [02:33]
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**  [02:45]
So the tool does the arithmetic.

**GEORGE**  [02:48]
And you hold the responsibility. That stays with the person whose name is on the work.

### Sources for the on screen credit

- ICAEW Code of Ethics, ICAEW
- Don't let AI tools land you in hot water, ICAEW
- Generative AI guide: ethics, ICAEW
- Harber v Commissioners for HMRC [2023] UKFTT 1007 (TC), First-tier Tribunal (Tax Chamber)

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## Review, evidence and what to tell the client

**Runtime** about 3 minutes. **Words** 463. **Starts at** 02:54 in the full course recording.

### Learning outcomes to state on camera

- 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

### Script


`[CUE 1]` *A ladder of review from reading a draft, to sampling categorised transactions, to tracing a figure, to checking the legislation*

**EMMA**  [02:54]
George, last time was the principles. Now the practical bit. How much do I have to check what these tools produce?

**GEORGE**  [03:02]
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**  [03:16]
And figures?

**GEORGE**  [03:17]
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.


`[CUE 2]` *A working paper showing what was asked, what was produced, what it was checked against and what was changed*

**EMMA**  [03:28]
Any warning signs?

**GEORGE**  [03:29]
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**  [03:40]
Say a client disputes something next year. What do I show them?

**GEORGE**  [03:44]
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.


`[CUE 3]` *Two guidance documents dated June 2025 and 30 March 2026 with the phrase appropriate confidence*

**EMMA**  [04:00]
Has the regulator said anything?

**GEORGE**  [04:02]
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**  [04:14]
What's the gist?

**GEORGE**  [04:15]
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.


`[CUE 4]` *An engagement letter with a short paragraph on AI tools, client data and review by a qualified person*

**EMMA**  [04:33]
I've seen working papers that just say per AI tool.

**GEORGE**  [04:37]
That isn't a working paper. Say what was checked, against what, and by whom.

**EMMA**  [04:43]
Do I have to tell clients?

**GEORGE**  [04:45]
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.


`[CUE 5]` *Four duties unchanged by AI: money laundering, tax returns, data protection and decisions about people*

**EMMA**  [04:55]
Some of mine would object.

**GEORGE**  [04:57]
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**  [05:15]
Is there anything AI doesn't change at all?

**GEORGE**  [05:18]
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**  [05:32]
And tax returns?

**GEORGE**  [05:33]
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**  [05:50]
So the short version.

**GEORGE**  [05:51]
No regulator accepts the software did it. If the duty was yours before the tool arrived, it's yours now.

### Sources for the on screen credit

- AI in Audit: guidance, including Generative and Agentic AI Guidance (30 March 2026), Financial Reporting Council
- FRC publishes landmark guidance providing clarity to audit profession on the uses of AI (June 2025), Financial Reporting Council
- ICAEW Code of Ethics, ICAEW
- Data (Use and Access) Act 2025, legislation.gov.uk

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