PCAOB Staff Shares Observations From Outreach on Use of Generative Artificial Intelligence in Audits and Financial Reporting

Today, the PCAOB released a new staff Spotlight publication, “Staff Update on Outreach Activities Related to the Integration of Generative Artificial Intelligence in Audits and Financial Reporting(PDF).”

As part of the PCAOB’s ongoing work to assess whether there is a need for guidance, changes to PCAOB standards, or other regulatory actions in light of the increased use of technology-based tools, in recent months, PCAOB staff conducted outreach to audit firms and public companies to understand their perspectives on the integration of GenAI in audits and financial reporting. The PCAOB’s outreach covered the U.S. global network firms, along with several U.S. non-affiliated firms that audit more than 100 issuers. Collectively, the firms contacted by PCAOB staff audit the majority of the market capitalization for issuers.

The Spotlight includes several observations, including that the current integration of GenAI in audits conducted by the firms that the PCAOB staff spoke to appears to be focused primarily on administrative and research activities. However, most audit firms interviewed noted the potential for using GenAI in certain aspects of planning and performing the audit.

Firms also reported to the PCAOB that they continue investing in GenAI-enabled tools, while also acknowledging the limitations of GenAI, and the need for strong supervision of its use to guard against risks, such as data privacy and security.

PCAOB staff outreach indicated that public company preparers are exploring how GenAI can be used throughout their operations. While some preparers are exploring opportunities to incorporate GenAI in accounting and financial reporting processes, integrating GenAI in these processes appears to be secondary to integrating GenAI in operational and customer-facing areas.

While PCAOB staff outreach covered firms that audit the majority of the market capitalization for issuers, PCAOB staff have asked all firms to share their experiences with GenAI. The PCAOB continues to monitor developments in the use of GenAI carefully.

Visit the PCAOB’s Staff Publications page for more resources on the PCAOB's activities and observations. 

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About the PCAOB

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers registered with the Securities and Exchange Commission, including compliance reports filed pursuant to federal securities laws.