PwC has urged the Public Company Accounting Oversight Board to make the use of artificial intelligence by companies and auditors its “foremost priority”, arguing that the regulator should provide guidance in the near term on how its existing auditing standards apply as AI becomes increasingly embedded in audit work.
In an August 5 comment letter responding to the PCAOB’s consultation on its future standard-setting agenda, PwC said the regulator should initially focus on guidance rather than attempting immediately to write detailed new rules for a technology that is changing rapidly. The consultation forms part of a wider reassessment of the PCAOB’s future role and priorities, which Big4News is tracking in its timeline of the changing relationship between the PCAOB and SEC.
PwC also recommended that the PCAOB establish an AI task force, deepen its engagement with audit firms and draw on its inspection teams. The firm said guidance should address concerns including data bias, explainability and automation bias, together with questions around model training, traceability and whether AI-generated work can be reconstructed.
The firm argued that humans should ultimately remain responsible for judgments including risk assessments, the sufficiency of audit evidence, contradictory information and the final audit conclusion. That requirement raises a related workforce problem: how do junior auditors develop the judgement needed to challenge AI when the technology increasingly performs the routine work through which previous generations learned the job?
KPMG and EY are already redesigning their early-career audit programmes around precisely this issue.
PwC is not alone in pressing the issue. The regulatory question is becoming crucial as major firms invest heavily in bringing AI into their audit processes. Bloomberg Law reported Wednesday that both auditors and investors are now pushing the PCAOB to move faster in explaining how its existing standards should be applied to AI-enabled audit work.
Long-established concepts such as audit evidence, professional scepticism, supervision, documentation and human accountability now have to be reconsidered in a world where increasingly significant parts of the audit process are performed or assisted by AI. The risks are no longer theoretical: there have been cases of fabricated citations, unsupported claims and other apparent AI-generated failures across all four Big Four networks, highlighting what can happen when adoption moves faster than verification and review controls.
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About the author: Claudine Cassar is the founder and editor of Big4News, covering audit, consulting, regulation and governance across Deloitte, PwC, EY and KPMG.