Audit & Assurance / Technology in Audit

Artificial intelligence is moving rapidly from experimentation into the audit environment. Data analytics, automated audit tools, machine learning and generative AI can help auditors analyse large volumes of information, identify unusual patterns and focus attention on areas requiring professional judgement. The opportunity is significant. But so is the responsibility.

Recognising the changing audit environment, the National Financial Reporting Authority (NFRA) published its Staff Series on Technology in Audit: 01 – General Principles for Technology Adoption in Audit on 23 July 2026. The publication provides a principles-based, technology-neutral framework for considering the use of technology in audit.

THE KEY MESSAGE: TECHNOLOGY DOES NOT REPLACE THE AUDITOR

    • AI can analyse information. It can identify patterns and exceptions. It can assist with documentation and other audit processes.
    • But it cannot assume responsibility for the audit opinion.
    • The auditor remains responsible for evaluating the information generated through technology, applying professional judgement and determining the appropriate audit response.
    • This distinction becomes increasingly important as AI outputs become more sophisticated and persuasive.

PROFESSIONAL SCEPTICISM REMAINS CRITICAL

    • One of the practical risks of technology-enabled auditing is over-reliance on automated results.
    • A system-generated conclusion may appear objective simply because it has been produced by a sophisticated technology platform. That should not reduce the auditor’s professional scepticism.
    • Before relying on technology-assisted output, auditors need to consider whether the underlying data is complete and reliable, whether the technology is appropriate for the audit objective, whether there are limitations in the analysis or output, whether the result requires further corroboration, and whether the auditor has independently evaluated the conclusion.
    • Technology should strengthen professional judgement—not substitute for it.

AUDIT FIRMS NEED A GOVERNANCE FRAMEWORK

    • The increasing use of AI also creates a firm-level question: Who decides whether a technology is appropriate for use in an audit?
    • Audit firms should increasingly consider a structured framework covering selection, validation, competence, documentation and monitoring.
    • This becomes particularly important where technology influences risk assessment, audit procedures or evaluation of evidence.

DATA QUALITY REMAINS FUNDAMENTAL

    • AI cannot compensate for poor-quality information.
    • If the underlying data is incomplete, inaccurate or incorrectly extracted, even sophisticated analytics may produce an unreliable outcome.
    • Technology-enabled auditing should therefore be viewed as a chain:
    • Reliable data → Appropriate technology → Appropriate analysis → Professional evaluation
    • A weakness at any stage can affect the audit conclusion.

IMPLICATIONS FOR AUDIT COMMITTEES

The increasing use of technology in audit is also relevant to Audit Committees and those charged with governance. Some useful questions include:

1. What significant technology was used during the audit?
2. What audit procedures did it support?
3. How was the technology evaluated before use?
4. How was the reliability of the underlying data considered?
5. How was professional judgement applied to technology-generated results?

The important question is not simply whether the audit team is using AI. It is whether the use of technology is contributing to better audit quality.

FROM EXPERIMENTATION TO GOVERNANCE

  • The audit profession is likely to see continued and rapid development in AI and other technologies.
  • The challenge for audit firms is therefore not to avoid technology, but to adopt it responsibly.
  • The strongest technology-enabled audit will not necessarily be the one that uses the most advanced AI.
  • It will be the one that combines technology, reliable evidence, professional scepticism, effective review and human judgement.
  • Technology can enhance the auditor’s capabilities. It cannot assume the auditor’s responsibility.

OFFICIAL SOURCE

National Financial Reporting Authority (NFRA), Staff Series on Technology in Audit: 01 – General Principles for Technology Adoption in Audit, published 23 July 2026.
https://nfra.gov.in/staff-series-on-technology-in-audit/

This article is intended for general information and professional awareness and should not be construed as professional advice in relation to any specific situation.

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