Public company accountants and auditors have been using artificial intelligence (AI) for financial reporting matters largely without new regulatory requirements. At least for now, the SEC will not step in with prescriptive guidance, given the rapid speed of change.
However, the Securities and Exchange Commission’s (SEC) Office of the Chief Accountant (OCA), which has been closely monitoring the AI landscape within the financial reporting ecosystem, might put together a set of reminders for the appropriate use of AI, as it introduces a whole new set of risks, such as hallucinations, model drift, biases, lack of explainability around how AI generates outputs, and concerns about the data used by AI.
It’s “a little bit hard to be prescriptive about this because it is such a quickly evolving area, and there’s such a variety of tools, and… they kind of all exist on the scale, so the exact approach may be a little bit hard to pinpoint,” Michal Dusza, a deputy chief accountant in OCA, said at the annual SEC and Financial Reporting Conference at the University of Southern California on June 4, 2026. “I do think just kind of given where we stand now, it would be hard to create something, given just the pace of change, something that is prescriptive or definitive.”
For now, some of the existing principles-based frameworks such as COSO‘s as well as the SEC’s guidance regarding management’s reporting of internal control over financial reporting (ICFR), are helpful resources for practitioners.
Potential OCA Reminders on AI
“Having said that, we constantly evaluate that space, and we probably – I don’t want to promise anything – but over the next few months, you may be hearing from us in a little bit more formal way, most likely simply in terms of reminders and the right questions to be raised – there are not necessarily definitive answers to some of the questions – but I do think it’s important to pause and ask those questions and make sure that the implementation process is in fact deliberate, thoughtful, and subject to appropriate controls.”
Risks and Concerns of AI in Financial Reporting Ecosystem
Based on its outreach and monitoring of AI use, Dusza described at the conference some concerns that the OCA will discuss more formally in the coming months through a set of reminders.
Third-Party Service Providers
One area of concern is third-party service providers and their use of AI in service offerings or systems that are relied upon in financial reporting.
“Does management even have the right handle on what these systems are? What kind of assurance do you get from these providers around the AI that may be used in their service offerings?” Dusza asked.
Data Quality
Another area that companies and auditors should carefully consider is the quality of data that is fed into AI tools.
“I think traditionally, thinking about auditing, we have focused significantly on reliability of data, the volume of data that is consumed by AI – both to train the AI but then also to operate it – is huge,” Dusza explained. “What kind of controls do we have in place in order to be able to rely on this data as management, as auditors.”
Management’s Risk Assessment
The third area of concern is management’s risk assessment of AI.
“What management is doing? Is management staying sufficiently on top of AI deployment throughout the organization?” he asked.
Moreover, a lowered barrier to entry creates another layer of risks. The traditional IT systems deployed in financial reporting are accessed and changed by a small, appropriate group of people. Today, companies expect their employees at all levels of the organization to be innovators and to use AI in creative ways, introducing new risks and requiring new governance approaches to address them.
“That lower barrier to entry, and this sort of citizen-led innovation, how frequently do we update our risk assessment? How much do we understand about AI that may be proliferating throughout our business and financial reporting processes?” Dusza asked. “Do we think about this at a sufficiently granular level and on an iterative basis throughout the year?”
He said that these are some of the questions that OCA staff are asking themselves.
“We try to share some of these thoughts in forums like these, and you know, we will be thinking about how we can share some of these thoughts with broader audiences in the months to come,” he added.
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