The FRC has launched a sandbox for audit firms wishing to explore the adoption and deployment of artificial intelligence (AI) and other technologies. This will provide a secure environment for firms with a use case or a solution ready for testing, piloting or limited deployment.

The FRC’s Audit Tech and AI Sandbox will support firms looking to harness technologies to improve audit quality but the FRC will not endorse or recommend any particular tool or application for adoption by participating firms.

Gaining confidence to use AI

Participation should improve firms’ confidence that they can deploy technology effectively, with the right controls in compliance with the relevant standards.

“We know that there are lots of potential benefits in terms of audit quality and firms’ competitiveness,” says Ali Hall, the FRC’s Head of Innovation and Improvement Hub.

“The Sandbox is about realising those benefits by addressing the regulatory and practical challenges firms may face as they prepare to scale up new systems or tools across their business. We see this as being valuable across all firms, including those starting their technology journey, those developing in-house solutions and those using third-party technology.”

Sharing information and experience 

Participants will be expected to share information about their chosen technology, their approach to implementation, and engage in detailed discussions with the FRC.

“These discussions could be about the design of new tech tools, testing, controls, prompt engineering, and/or the role of the human in the loop,” Hall says. “We may focus on specific decisions around model or tool selection, governance and staff education, integration within the audit methodology, or piloting new systems.”

Feedback from previous FRC sandboxes highlighted the benefits of open dialogue with the regulator and practical insights that firms can apply in their organisations.  

“We want to continue to use these open and collaborative discussions with the sector to develop practical solutions to industry challenges,” says Hall. The sandbox will provide the sector with additional insights on how audit firms are using technology, where they see the greatest benefits, and how to navigate the key challenges, he added.

Any queries about the sandbox should be addressed to hub@frc.org.uk