Navigating the Rise of Automated Audit Tools: Key Takeaways from the FRC’s Latest Review

The UK’s Financial Reporting Council (FRC) recently released its Thematic Review on the Certification of Automated Tools and Techniques (ATTs) - a deep dive into how the six largest audit firms validate emerging technologies for use in audits.

With the proliferation of audit automation and AI across the profession and more widely, the FRC emphasizes the need for robust certification processes to ensure outputs are reliable and support compliant auditor judgement.

The FRC’s thematic review makes clear that Automated Tools and Techniques (ATTs) can be a powerful driver of audit quality when used effectively. Properly certified tools provide auditors with greater consistency, reduce manual effort, and enhance the reliability of audit evidence.

The review notes that ATTs have significant potential to strengthen risk assessment procedures and testing activities, particularly by enabling data-driven insights at scale. For firms, this means more efficient audits, stronger assurance, and a clearer line of sight into how risks are being addressed.

Here’s a breakdown of the report’s core findings and why they matter - particularly if you’re considering embracing AI for your audit function.

Why Certification Matters

As ATTs become widespread, the FRC warns that auditors cannot simply roll them out without proper validation. The tools must be certified through rigorous testing, underpinned by robust governance frameworks, clear accountability, and well-documented oversight.

For firms, this means implementing system-wide controls, covering everything from code testing to ongoing performance monitoring to ensure a tool’s output is accurate, consistent, and, most importantly - auditable.

What the FRC Found - Common Gaps (and Good Practice)

The FRC’s review unearthed a range of issues:

• Inconsistent documentation of decisions - Auditors frequently relied on ATTs without explaining or evidencing why a tool’s output was deemed acceptable
• Poorly defined governance - Some firms lacked structured policies for approving new tools or overseeing updates
• Traceability issues - Outputs couldn’t always be traced back to source data, raising concerns about auditability
• Live testing oversight gaps - Once tools were deployed, ongoing monitoring was often lacking

For firms demonstrating good practice, the FRC highlighted the presence of clear user guides, rigorous version control, and formal approval boards - all contributing to significantly more robust and reliable assurance frameworks.

The FRC’s Expectations - Five Pillars of ATT Assurance

The FRC outlines five core requirements:

1. Clear governance frameworks for tool evaluation and ongoing oversight
2. Detailed documentation to capture critical judgments and decision-making logic
3. Comprehensive testing - both initial and periodic validation of outputs
4. Data lineage and traceability to ensure every result can be traced back and justified
5. Ongoing performance monitoring to detect drift or degradation over time

Adoption of these pillars not only aligns with audit standards, but also anticipates imminent pushback from regulators and liability insurers.

How Platformed Addresses the FRC’s Pillars of ATT Assurance

1. Detailed Documentation - Each AI conclusion generated through Platformed is paired with explainable reasoning and linked audit evidence, giving auditors a clear view of the judgment logic. Platformed’s AI only uses information and evidence provided by the auditor so there’s no risk of rogue or unvetted external sources being used
2. Testing and Validation - Platformed is built with AI from the ground up with UX wholly centered on human-in-the-loop review and proveability. Outputs are reviewed for accuracy with a focus on auditor oversight, not just automation, allowing auditors to vet, re-prompt, and recalibrate AI as needed
3. Data Lineage and Traceability - Platformed provides links from conclusions back to source data and provides version history, making outputs fully traceable and exportable as working papers reports
4. Performance Monitoring - Platformed automatically highlights anomalies, conflicting inputs, or stale data, helping auditors detect degradation and maintain consistent audit quality
5. Governance Frameworks - Platformed is built for transparency and governance, allowing easy evaluation and ongoing oversight of the platform and its subprocessors through its real-time updating trust center

By weaving these five pillars into its foundation - governance, documentation, testing, traceability, and live monitoring - Platformed’s Financial Audits directly addresses the FRC’s call for certified, auditable, AI-powered tools. It doesn’t simply “help with AI” - it builds compliance-era assurance into the workflow.

That means Platformed is compliant with regulators’ expectations, certification-ready, and****designed to stand up to the same scrutiny the FRC expects - embedding audit evidence and oversight into every stage.

Bridging the Gap - Opportunities for Audit Firms

Smaller or mid‑tier firms, often without Big‑Four resources, might view these compliance imperatives as out of reach. But the FRC stresses that the underlying principles - transparency, documentation, traceability - are achievable for any practice willing to invest in structured processes.

For firms embracing AI, there’s an opportunity to differentiate through rigorous yet accessible compliance frameworks underpinned by smart automation.

The FRC’s review is a clear call-to-action - automated audit tools must not only be innovative, but certified, documented, and traceable. Firms that treat this as compliance red tape miss the bigger opportunity - to embed regulatory-grade audit automation that drives efficiency, quality, and client trust.

For any firm looking to embrace AI in auditing, Platformed’s Financial Audits delivers not just automation, but a compliance-first foundation, perfectly aligned with the FRC’s vision of next‑gen, regulator-compliant auditing.

Discover how Platformed can help you certify your audit tools, streamline compliance, and secure regulatory confidence, without compromising on speed or profitability. Learn more about Platformed’s Financial Audits here.