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Accountants well positioned to meet demand for AI assurance

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1 year ago

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A joint report authored by the AICPA and Chartered Professional Accountants Canada said the rapid rise of AI throughout the global economy opens up new opportunities for accounting professionals to provide independent assurance of these systems to help build trust and confidence in their functions. 

In just a few years, AI has wormed its way into virtually every business sector, but with this new technology has come new risks. The report points out the black box nature of many AI models, which limits the understanding of how AI systems make predictions and reach their decisions, and in turn creates operational risks for end users from possible errors and  inconsistencies. This has created a demand among organizations for ways to manage and report on various aspects of their AI development, deployment, use and oversight.

The joint report said the accounting profession is ideally positioned to meet this demand. Indeed, many firms are already offering AI-related services ranging from impact and risk assessments to evaluate the potential effects of AI deployment on various stakeholders to model validation testing to evaluate whether AI systems meet specific performance and compliance criteria. 

AI governance

“As the demand for transparency and accountability for AI systems grows, it is anticipated that more CPA firms will expand their assurance service offerings to include AI, but factors such as the challenges discussed below will play a role in how quickly this may happen,” said the report. 

Still, while many are colloquially using terms like “AI audit” or “AI assurance,” the report said these terms are often used to refer to a variety of different types of engagements and assessments. The report noted that some of the services described as assurance services are performed by entities, such as technology consultancies or internal audit teams, that may not follow the same professional standards as assurance engagements performed by CPAs. 

The report clarified that what they mean is an engagement in which an assurance practitioner designs and performs procedures to obtain sufficient appropriate evidence, based on the practitioner’s consideration of risk and materiality, in order to express an opinion or conclusion about the subject matter in the form of an assurance report. The two organizations see great opportunity in this area, though not without challenges. 

Professionals today face a number of issues when it comes to providing assurance over AI systems, with one of the more prominent being the lack of suitable criteria for such engagements. The report noted that trustworthy AI systems often require characteristics such as explainability, interpretability and fairness, but without a frame of reference provided by suitable criteria, any conclusion is open to individual interpretation and misunderstanding. Another major assurance challenge is the fact that many of these systems evolve and adapt, which calls into question the relevance of evidence surfaced at specific points in time. 

These kinds of issues mean that while engagement protocols are similar to other cases, they do need to be adapted to the particularities of AI systems. For instance, professionals could need to determine the span of the assurance period so it is proportionate to cover the essential activities and transactions of the AI system. The report addresses design effectiveness within a specific span of time, perhaps six months or a year, with the responsible party determining the period of coverage. 

Or, in response to the lack of suitable criteria, the responsible party or the engaging party could be responsible for selecting the criteria, while the engaging party is responsible for determining that such criteria are appropriate for its purposes. These criteria should be relevant, neutral/objective, reliable/measurable, complete and understandable. 

In terms of understanding roles and accountabilities, the report suggested that the assurance process would involve the collaboration of several key parties, including the organization that developed and/or deployed the AI model, the party responsible for the subject matter (if different), relevant third- or fourth-party vendors, the report user(s) and the assurance provider. 

Meanwhile, the user and practitioner will consider the organization’s readiness for an assurance engagement, whether the responsible party will evaluate the subject matter against the criteria in addition to the work performed by the practitioner or whether it will be a direct engagement, the need for independence, the level of assurance (reasonable or limited) and the cost vs. benefit of such an engagement. Management determines the type of engagement it needs and practitioners will determine whether they expect to be able to obtain the evidence to support their opinion or conclusion and obtain a meaningful level of assurance. 

Finally, the report noted that, depending on the nature and complexity of the AI system, the expertise of the assurance team may extend to understanding AI algorithms, data analytics and AI management systems. In some cases, the CPA-led team may need to engage additional specialists, such as data scientists or AI engineers. 

The report said that, in anticipation of growing demand for AI systems assurance, CPAs should support education and training in the technology, consider collaborations with AI experts and data scientists, as well as leverage their expertise and influence to shape AI governance and assurance procedures. 

“As AI assurance evolves, it is important that CPAs play an active role in shaping the criteria and assurance requirements for AI,” the report concluded. “Whether they are operating within industry as a developer, deployer or user of AI, or in public practice, CPAs bring valuable expertise and perspective to the table. With robust professional standards and expertise in delivering assurance and advisory services to meet the needs of organizations and users, CPAs are uniquely positioned to provide valuable services to build trust and confidence in AI systems, leveraging the long-established standards and frameworks of the profession.”

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Accounting

Embedded AI and Automated Anomaly Detection Reshape Modern Corporate Accounting Frameworks

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11 hours ago

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September 13, 2026

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Embedded AI and Automated Anomaly Detection Reshape Modern Corporate Accounting Frameworks

The accounting and audit landscape in 2026

The accounting and audit landscape in 2026 is defined by the full integration of artificial intelligence directly into core enterprise software platforms. Rather than operating as standalone third-party tools, generative AI, automated reconciliation, and continuous anomaly detection are now natively embedded within major ERP engines including SAP, Oracle, Microsoft Dynamics, QuickBooks, and Sage. This technology integration is transforming daily financial operations, internal reporting controls, and external audit workflows.

Recent industry benchmark surveys reveal a widening performance gap

Recent industry benchmark surveys reveal a widening performance gap between finance teams utilizing integrated AI automation and those relying on legacy manual processes. Organizations actively leveraging embedded AI report up to 37% higher revenue per employee, driven by automated invoice matching, instant ledger entries, and predictive cash flow modeling. Routine, high-volume transactional tasks that once required manual intervention are now executed in real time with continuous digital audit trails.

AI introduces new governance and control responsibilities

However, the widespread deployment of embedded AI introduces new governance and control responsibilities for accounting professionals. Auditing standards now mandate strict verification protocols for algorithmically generated journal entries and financial commentary. External auditors are evaluating enterprise AI governance frameworks, reviewing automated rule sets, testing data ingestion pipelines, and ensuring that financial controllers maintain human-in-the-loop oversight over automated system outputs.

Furthermore, cloud governance and data security have become core operational skills for modern CPAs and controllers. As financial ledgers and client data stream through interconnected cloud ecosystem APIs, accounting teams must implement multi-factor access controls, continuous data encryption, and strict data privacy compliance to protect sensitive financial records from cyber vulnerabilities.

The embedding of AI into enterprise accounting software redefines internal financial controls and career requirements for accounting professionals. Business owners and finance leaders must update governance protocols, invest in staff digital literacy, and ensure accounting systems maintain rigorous audit compliance to capture productivity gains safely.

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Accounting

Mandatory ESG Reporting Standards Demand Standardized Non-Financial Audit Trails

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1 week ago

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September 5, 2026

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Mandatory ESG Reporting Standards Demand Standardized Non-Financial Audit Trails

Corporate accounting departments face an expanded regulatory mandate as mandatory sustainability and Environmental, Social, and Governance (ESG) reporting frameworks take full effect internationally. Governed by the European Union’s Corporate Sustainability Reporting Directive (CSRD) and the International Sustainability Standards Board (ISSB) IFRS S1 and S2 standards, enterprise financial controllers are now legally required to track, verify, and report non-financial data with the same internal controls and auditability as traditional financial statements.

The expansion shifts ESG compliance

This regulatory expansion shifts ESG compliance from marketing departments to corporate accounting offices. Financial managers are now responsible for gathering, consolidating, and verifying carbon emissions metrics, supply chain labor conditions, water usage, and climate risk exposures across multi-tiered corporate structures. These non-financial metrics must be integrated into standardized general ledgers to withstand rigorous third-party audit assurance processes.

To comply with these rigorous reporting mandates, accounting software providers have added dedicated ESG modules designed to aggregate data from IoT sensors, utility platforms, and vendor management systems. Controllers are implementing internal control frameworks—modeled after traditional COSO frameworks—to ensure the completeness, accuracy, and consistency of sustainability disclosures, protecting organizations against greenwashing penalties and litigation risks.

The transition requires significant cross-functional collaboration between accounting teams, legal counsel, and operational directors. Accounting professionals are expanding their technical expertise beyond financial ledgers to master carbon accounting methodologies, lifecycle assessment standards, and non-financial data governance protocols, fundamentally expanding the role of the modern corporate accountant.

Why This Information Matters
Mandatory ESG disclosures require companies to treat environmental and social metrics as audited financial records. Executives, accountants, and board members must institute formal tracking and assurance processes to satisfy legal mandates, maintain investor confidence, and mitigate regulatory non-compliance risks.

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Accounting

SEC’s Semiannual Reporting Proposal Faces Investor Pushback: What CFOs Need to Know

Published

3 weeks ago

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August 25, 2026

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U.S. Securities and Exchange Commission (SEC)

A proposal from the U.S. Securities and Exchange Commission to potentially shift some public companies away from quarterly financial reporting toward a semiannual model is drawing significant pushback from investors, even as it continues moving through the regulatory process. The debate has direct implications for corporate finance teams, auditors, and the broader transparency of U.S. capital markets.

What the SEC Proposed

According to a summary published by accounting advisory firm Cohen & Co., the SEC issued a proposed rule on May 19, 2026, aimed at simplifying financial reporting requirements for many U.S. public companies. The proposal would potentially reduce the frequency of certain mandatory disclosures from quarterly to semiannual, a structural change that has not been made to core U.S. reporting requirements in decades.

The proposal follows an extended debate within U.S. policy circles, with proponents arguing that reduced reporting frequency could lower compliance costs and free up management time for longer-term strategic planning rather than quarter-to-quarter results management.

Why Investors Are Pushing Back

Comment letters submitted in response to the proposal have been extensive, and according to Cohen & Co.’s review of the public record, investors “appear to be largely opposed” to the shift, viewing frequent interim reporting as a core benefit of U.S. capital markets relative to other jurisdictions.

Accounting and law firms have taken a more measured position, generally urging any changes to remain aligned with the Financial Accounting Standards Board (FASB), whose existing disclosure requirements and guidance are built around a quarterly reporting cadence. A shift to semiannual reporting without corresponding changes to FASB guidance could create friction between SEC filing requirements and GAAP-based disclosure expectations.

Lessons From the U.K. Experience

The debate is not without precedent. The United Kingdom moved away from mandatory quarterly reporting for listed companies in 2014, returning to a semiannual disclosure requirement. According to Cohen & Co.’s analysis, that experience offers a cautionary data point: there was no measurable increase in capital expenditure or R&D investment following the change, while analyst coverage of affected companies declined as reliable interim information became less available — a particular risk for smaller and newly public companies that rely on analyst coverage to maintain investor visibility.

Practical Implications for Finance Teams

Beyond the debate over disclosure philosophy, the proposal carries practical complications. Many companies have debt covenants and credit agreements structured around quarterly financial delivery; a shift to semiannual reporting could require renegotiating those terms. Reduced reporting frequency would also extend the “window of market silence” between disclosures, a factor that governance and investor-relations teams would need to manage carefully to avoid information asymmetry.

Separately, and unrelated to the reporting-frequency debate, the SEC and FASB have continued finalizing more routine updates this year. New Accounting Standards Updates are taking effect for December 31, 2026, fiscal year-ends covering income tax disclosures, credit loss measurement, induced debt conversions, and stock compensation, according to Eide Bailly’s review of 2026 ASU activity. Additional guidance on paid-in-kind dividends and environmental credits is also on the near-term horizon.

What to Watch Next

The semiannual reporting proposal remains in the comment and review phase, and no final rule has been adopted as of this writing. Finance leaders should monitor the SEC’s regulatory agenda for further movement, while treating the current quarterly reporting requirement as the operative standard until any final rule is issued and an effective date is set.

Given the extent of investor opposition documented in the comment file, a full shift to mandatory semiannual reporting appears more likely to result in either a scaled-back compromise or continued study rather than swift adoption — though the SEC’s ultimate direction remains uncertain.

 

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