FRC Warns Auditors Against Compromising Independence in AI Era

The Executive Secretary and Chief Executive Officer of the Financial Reporting Council of Nigeria (FRC), Dr Rabiu Olowo, has warned auditors against compromising their independence and professional judgement as artificial intelligence (AI) continues to transform the audit and assurance profession.

Olowo gave the warning at the 2026 Audit and Assurance Leadership Summit held at the Lagos Marriott Hotel, Ikeja, Lagos, with the theme, “Audit Integrity in the AI Era: Independence, Accountability and Reliable Financial Reporting.”

The summit brought together regulators, audit and assurance professionals, industry leaders, financial reporting experts and other key stakeholders to examine the opportunities and emerging risks associated with the growing application of AI in auditing.

In his welcome address, Olowo acknowledged the enormous potential of AI to improve the quality and efficiency of audits, noting that auditors were increasingly deploying machine learning, predictive analytics, data analytics and continuous auditing tools.

According to him, technology enables auditors to analyse significantly larger volumes of financial data, strengthen fraud-risk assessment, improve efficiency and generate deeper analytical insights.

He, however, cautioned that the growing reliance on technology also presented risks, including inaccurate or manipulated data, cybersecurity threats and the possibility of auditors blindly relying on outputs generated by sophisticated systems.

Olowo stressed that AI must complement, rather than replace, professional judgement and scepticism.

He also expressed concern over practices that blur the boundaries between preparing financial statements and independently auditing them, warning that such arrangements could create self-review threats, undermine objectivity and erode public confidence in audited financial statements.

“Let me therefore emphasise this point very clearly, that audit integrity cannot exist where independence is compromised. Technology must never become an excuse for weakening the fundamental ethical principles of the profession,” Olowo said.

The FRC chief maintained that the rapid evolution of AI made it even more important for auditors and other professionals within the financial reporting ecosystem to uphold independence, accountability, transparency and ethical standards.

In her keynote address, the Minister of Industry, Trade and Investment, Dr Jumoke Oduwole, said credible financial reporting remained fundamental to investment decisions, lending, policymaking and sustainable economic growth.

The minister, who was represented by the Permanent Secretary of the ministry, Dr Chris Osa Isokpunuwu, said AI was creating significant opportunities in financial analysis, risk assessment, fraud detection, internal controls and audit processes.

She, however, emphasised the need for human oversight and strong ethical safeguards in the deployment of AI.

“Technology may change the tools of assurance, but it must never change the principles upon which assurance is built. Integrity, independence, professional scepticism, transparency, and accountability must remain at the centre of the audit profession,” Oduwole said.

The summit was formally opened by Isokpunuwu, who represented the minister. It also featured goodwill messages from representatives of the Auditor-General for the Federation, Shaakaa Kanyitor Chira; the Institute of Chartered Accountants of Nigeria (ICAN); Ambassador Shuaibu Ahmed, FCA; former FRC Executive Secretary/CEO, Mr Sola Oyetayo; Group Financial Controller, Axela Limited, and other stakeholders.

The first panel session, moderated by Anthony Amodu, Chief Revenue Officer, Pastel Africa, examined “AI and the Future of Audit Quality: Opportunities, Risks, and Regulatory Expectations.”

The session featured Emmanuel Akeni, Head of Systems Audit and Security Compliance, Credit Direct Finance Company Limited; Christopher Ogirri, Associate Director and Chief AI Officer, PwC; Oluwatobi Blessing Olayiwola, AI and Data Senior Manager, Deloitte & Touche; Dr Adedoyin Talabi, Principal Consultant, Data Pulse Nigeria Limited; and Dr Ivan Anya, Chief Executive Officer, Business Intelligence Technologies Ltd.

Discussions focused on the responsible application of AI in auditing, data security and backup systems, professional judgement, regulatory expectations and the need to ensure that technological innovation does not undermine auditor independence.

The second panel, moderated by Titus Osawe, former Director of the FRC, focused on “Closing the Audit Expectation Gap: Restoring Public Trust and Strengthening Accountability.”

The panel featured Sir Sunny Nwosu, National Leader Emeritus, Independent Shareholders Association of Nigeria; Jamiu Adeyemi Olakisan, Assurance Leader, EY West Africa; Ashade Akinyemi of the Financial Services Industry Audit Division, KPMG Nigeria; Kunle Oyetoyan, Finance and Corporate Reporting Regulatory Executive; Dr Iheanyi Anyahara, former Director, FRC Nigeria; and Ayoola Onabokun, Group Financial Controller, Axela Limited.

Speaking during the session, Anyahara identified the expectations of regulators as another dimension of the audit expectation gap.

He argued that auditors sometimes faced situations where regulators expected them to go beyond what was expressly required by professional standards.

According to him, professional standards should serve as a guide rather than being viewed strictly as either the minimum or maximum level of work expected from auditors.

He noted that the situation could create tension for auditors who, having complied with established standards, may question why they were subsequently expected to undertake additional responsibilities.

The discussions underscored the need for greater clarity around the responsibilities of auditors, regulators and other stakeholders in order to strengthen accountability and rebuild public confidence in financial reporting.

The 2026 Audit and Assurance Leadership Summit ultimately reinforced the FRC’s commitment to strengthening audit quality, financial reporting, professional independence and public trust, while ensuring that the Nigerian audit and assurance profession remains resilient and ethically grounded amid rapid technological advancement.