AI is increasingly woven into business life, and many firms are already using tools to streamline routine tasks.
Now regulators appear to be moving in the same direction as the Bank of England is reported to be considering AI-driven inspections to trawl the huge volumes of financial data they hold.
This may be the start of a new era of financial compliance and your business needs to be ready for the changes.
HM Revenue & Customs (HMRC) already uses some degree of automation, although the full extent of its AI use is not public.
A recent tribunal ordered HMRC to disclose how it applies AI in assessing R&D tax-relief claims amid concerns the technology may be ill-suited to such complex judgments.
That case highlights the broader question over whether AI can be relied on for nuanced financial review.
There are clear benefits when specialist AI is deployed by trained teams as routine work is sped up, mundane checks are automated and genuine issues can be discovered faster.
It is worth remembering that not all AI is equal.
Generic models can produce poor-quality outputs, hallucinate facts or miss subtle context.
These weaknesses become significant when AI is used inappropriately to make decisions and inform guidance beyond the scope of its capabilities.
The Bank of England’s interest is notable and the success of any roll-out will depend on the quality of the models and the skills of people operating them.
The reticence of HMRC to be open about their utilisation of AI has caused some suspicion among industry experts.
There is a fear that the secrecy may be an indicator that the AI use is not sufficient for the complex task at hand and that this could be negatively impacting reporting standards.
AI use also features some security concerns.
Some AI systems remain vulnerable to manipulation despite recent advances being made to make the systems more robust.
Prompt injection, where carefully crafted inputs override previous instructions, is a real risk, and experts warn that, theoretically, clever actors could try to engineer filings that bypass automated checks.
That possibility means regulators will need clear oversight and firms should assume automated systems can be tested and challenged by those who know how they work.
As the R&D debate shows, AI-powered reviews may already be happening and the implementation is only set to become more expensive.
Businesses should expect more rigorous screening and a higher standard for documentation as if the AI is used appropriately, it could see more errors and mistakes getting caught than ever before.
At the moment, the Bank of England is still only considering utilising AI, but it seems like HMRC is already on board with its use.
We will keep you up to date with the changes in how filings are monitored and reviewed and the steps you need to take to remain compliant.
With reporting standards likely to increase, it is imperative that you seek out professional financial support.
Speak to our team today to make sure that you are not caught out by more rigorous reviews.
