AI in finance and accounting
Provision 27 asks the directors to state that they consider the annual report and accounts, taken as a whole, fair, balanced and understandable. A language model is very good at understandable. It is structurally weak on balanced, and fluency is precisely what makes an unbalanced account hard to catch on review — the statement covers the whole report, so one well-drafted section can defeat it.
§ 1In practice
The Code is free and quotable, so here it is exactly. Provision 27: "The directors should explain in the annual report their responsibility for preparing the annual report and accounts, and state that they consider the annual report and accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the company’s position, performance, business model and strategy." Principle N sits above it: "The board should present a fair, balanced and understandable assessment of the company’s position and prospects." Neither is a requirement. The Code operates on comply or explain, so a board may depart and must then explain the departure; the consequence is disclosure and the reaction of the people who read it, not a sanction.
The failure mode is not fabrication, which is the risk everyone prepares for. It is tone. A model asked to draft a segment review produces prose that is orderly, confident and readable, and each of those qualities works against balance: a paragraph reading as authoritative is a paragraph a reviewer moves past. Under-weighting is the specific defect — the bad quarter given one clause and the recovery plan given three sentences, in a section no individual reader would call misleading. Because the directors’ statement is about the report taken as a whole, that is enough to put it under pressure. The FRC’s research on the use of artificial intelligence technologies in corporate reporting, published 8 July 2026, gives the scale: 39% of organisations report current use of generative AI in corporate reporting, a further 31% are piloting it and 18% are considering adoption within a year, while only 44% have mandated human oversight. The duty to prepare information without misleading reaches the accountant drafting the section; Provision 27 reaches the directors who sign for the whole.
The practical consequence is that review of AI-drafted narrative cannot be a read-through, because a read-through is exactly the test fluent text passes. Three checks work, and none is expensive. Read the section against the numbers it describes rather than against the previous year’s wording, since a model given last year’s report will reproduce last year’s emphasis. Ask what has been left out — omission is invisible on the page and is the defect the balance limb is aimed at. And check proportion deliberately: compare the space given to what went badly with the space given to what went well, which is crude and finds most of what matters. Where a reviewer concludes the draft is not balanced and it goes out regardless, the accountant involved is on the escalation ladder rather than in a disagreement about style.
§ 2What discharges it
The artefacts an assessor asks to see, and what makes each one sufficient rather than merely present.
01
Section by section, what was model-drafted, what was written by hand, and what was edited. Almost nobody keeps this, and without it the review effort cannot be pointed at the parts that need it.
02
The reviewer’s note recording that the narrative was read against the management information for the period rather than against the prior year’s text. It is the check that fluency defeats.
03
What a reader would expect to find and did not. Omission cannot be caught by reading what is on the page, so it needs someone working from the events of the year rather than from the draft.
04
The papers and the process supporting the statement, including how model-drafted material was treated. A statement about the report as a whole needs a basis covering the parts nobody wrote by hand.
§ 3Who it binds
Companies applying the UK Corporate Governance Code — those listed in the commercial companies category or the closed-ended investment funds category, incorporated in the United Kingdom or elsewhere. Provision 27 places the statement on the directors, not on the accountant who drafted the section, and it is comply or explain: a board may depart and must explain the departure in the annual report.
§ 4Worked example
A listed group uses a language model to produce first drafts of the operating review from the management pack and the prior year’s report. This year one division lost a major contract in the third quarter and its margin fell by a third. The drafted review covers the loss in a single sentence, follows it with two paragraphs on the division’s pipeline, and reads more smoothly than any operating review the group has published. Three reviewers approve it without comment.
Is anything in it untrue, and does Provision 27 care?
Nothing in it is untrue, and Provision 27 is not about truth. The statement the directors make is that the report taken as a whole is fair, balanced and understandable and provides what shareholders need to assess position, performance, business model and strategy. A reader of this review could not assess the performance of that division: the contract loss is present and weightless, and the pipeline material is doing the work the loss should have done. The model did not decide to under-weight anything — it reproduced the shape of last year’s review, in which nothing had gone wrong. That mechanism is worth understanding, because it means the defect appears where the year departs from the prior year, which is precisely where a reader is looking. The three approvals are the second finding. Nobody read the section against the divisional numbers, and the smoothness of the draft is why: there was nothing to snag on.
§ 5What a weak answer looks like
A factual accuracy check standing in for a balance review. Every figure in the narrative is agreed to the accounts, every claim is sourced, and the reviewer signs. Accuracy is the limb the drafting process was never likely to fail, and it is the only limb that got tested — nobody asked whether the emphasis was right, whether anything a shareholder needed was missing, or whether the section left a reader with the impression the year actually warranted. The check performed is the one a model is good at passing.
§ 6When it applies
1 January 2025
The UK Corporate Governance Code 2024 applies for accounting periods beginning on or after 1 January 2025. That is an accounting-period date rather than a compliance deadline, and it is not the publication date: the Code was published on 22 January 2024.
§ 7Elsewhere
Where another instrument addresses the same obligation. These are correspondences, not comparisons — the Council does not rank one framework against another.
Finance and accounting standards
The ethics code reaches the accountant who prepares information, requiring presentation not intended to mislead. Provision 27 reaches the directors who state that the report taken as a whole is fair, balanced and understandable.
Article 50 addresses disclosure where content is generated by an AI system. The Code asks nothing about disclosing that a section was model-drafted; the two duties sit on different questions about the same text.
A correspondence indicates that two instruments address the same underlying obligation. It is not a mapping endorsed by either body, not a statement that one satisfies the other, and not a judgement about which is more demanding.
§ 8Where this is assessed
Examined in 2 credentials, in the domains named on each card.
Anomaly and fraud flagging, and reporting · 20% of the paper
For finance and accounting professionals who use AI in analysis, close and reporting work — and verify the output before the numbers are relied on.
AI-assisted estimates, forecasts and disclosures · 25% of the paper
For senior finance and accounting professionals who set the terms on which AI is used across a finance function — and answer for the estimates, controls and disclosures it touches.
§ 9provenance
This page sets out what the instrument requires and what discharges it. The official text is the authority — these go straight to it.
§ 10Also read
Certification
What this page sets out is examined, on work the candidate has not seen, in the credentials beside it. Every paper is machine marked against its key and every result is reviewed and released by a named person, and every credential is on the public register.
AIAC-FNAF
Certified AI in Finance & Accounting, Fundamentals2 hours · remote, proctored · valid 2 years
AIAC-FNAP
Certified AI in Finance & Accounting, Professional2 hours · remote, proctored · valid 2 years
Ten questions on using AI at work. About two minutes, free. You finish as one of six types, with a card to share.
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A free quiz from the AI Assurance Council. Not a certification.