AI in finance and accounting
Section 13(b)(2) requires an issuer to keep books and records that in reasonable detail accurately and fairly reflect its transactions, and to devise internal accounting controls giving reasonable assurance that transactions are executed in accordance with management's general or specific authorisation. When an agent proposes or posts an entry, the question is what that authorisation covers.
§ 1Who it binds
United States issuers with a class of securities registered under section 12 of the Exchange Act and issuers required to file reports under section 15(d). The duty is the entity's and is not tied to any filing: the books and records provision and the internal accounting controls provision operate continuously, whether or not a report is due and whether or not any misstatement has occurred.
§ 2In practice
The two limbs are short and unusually concrete. Subparagraph (A) requires books, records and accounts that "in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer". Subparagraph (B) requires a system of internal accounting controls sufficient to provide reasonable assurances that transactions are executed in accordance with management's general or specific authorisation; that they are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; that access to assets is permitted only in accordance with management's authorisation; and that recorded accountability for assets is compared with the existing assets at reasonable intervals, with appropriate action taken on any differences.
The AI question sits in the first of those four assurances. What is "management's general or specific authorization" when a software agent proposes or posts an entry? A standing instruction to a model is arguably a general authorisation, and if it is, its scope is whatever the prompt and the permission set say — which means the boundary of what management has authorised is being drawn, in practice, by whoever configured the tool. That is a boundary almost nobody has drawn deliberately. The technical half of the problem is treated at bounding an agent's authority; this provision supplies the accounting half, which is the statutory record the authorisation has to be visible in.
Two further points keep the reading accurate. The comparison assurance — recorded accountability against existing assets, at reasonable intervals, with action on differences — is the limb an automated posting process most easily erodes, because a system that reconciles itself removes the friction that used to surface a difference to a person. And subsection (b)(4) provides that no criminal liability attaches for failing to comply with paragraph (2) except as provided in subsection (b)(5), so this is civil ground unless the knowing-circumvention provision is engaged. The permission layer that determines what an agent may reach is discussed at tool permissions and least privilege; the point here is narrower and older, namely that the authorisation has to be traceable in the accounting record itself.
§ 3What a weak answer looks like
"The agent only proposes; a person always approves." It is often true of the design and rarely true of the configuration, because a threshold beneath which items clear automatically is exactly the case where nobody approves anything. The honest version of the answer states the threshold, says who set it, and shows the value of what passed under it during the period. A function that cannot produce that number has not established the boundary of what management authorised — it has described an intention about it.
§ 4What discharges it
The artefacts an assessor asks to see, and what makes each one sufficient rather than merely present.
01
An approved statement of what the agent may do, to what value, on which accounts, and on whose authority — dated and owned by a person, not inferred from a configuration file.
02
Every entry should be attributable to a general or specific authorisation that existed before it was made. Attribution to a service account with no owner leaves the statutory question unanswered.
03
The interval, the method, and what was done about differences. Where the comparison is itself automated, the record should show who reviewed the exceptions rather than only that none remained open.
04
Access to assets is permitted only in accordance with management's authorisation, and an agent's reach is a form of access. Grants made by a platform team without a finance approver are the common gap.
§ 5Elsewhere
Where another instrument addresses the same obligation. These are correspondences, not comparisons — the Council does not rank one framework against another.
The agentic material addresses how an agent's scope of action is defined and constrained technically. This provision addresses the same scope as an accounting authorisation that must be visible in the books and records.
Permission design determines what an agent can reach. The internal accounting controls limb treats that reach as access to assets, which must be in accordance with management's authorisation.
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.
§ 6When it applies
19 December 1977
Enactment of the Foreign Corrupt Practices Act of 1977, which added the books and records and internal accounting controls provisions to section 13(b) of the Exchange Act.
23 August 1988
The amendment adding the statutory gloss on "reasonable detail" and "reasonable assurances", which is what makes the standard an ordinary-prudence one rather than an absolute. It is also the wording an issuer relies on when arguing that a control over an automated process was sufficient.
§ 7Exposure
No fixed maximum — civil enforcement by the Commission; no criminal liability for paragraph (2) itself
The provisions are enforced civilly by the Securities and Exchange Commission, which may seek injunctive relief, civil penalties and undertakings. Section 13(b)(4) provides that no criminal liability shall be imposed for failing to comply with paragraph (2) except as provided in section 13(b)(5), which addresses knowing circumvention of a system of internal accounting controls and knowing falsification of a record. Neither limb carries a stated ceiling.
§ 8Where this is assessed
Examined in 2 credentials, in the domains named on each card.
AI in analysis, forecasting and FP&A · 25% 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 inside internal control and the close · 20% 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.