Auditors quizzed over use of AI in council finances

Technology is already being used to review council accounts but key audit judgements are still made by humans, a meeting heard.

Questions over the use of artificial intelligence in public sector auditing were raised at Fareham’s latest audit and governance committee meeting, as councillors scrutinised the external auditor’s annual plan.

The discussion came as auditors EY set out how they aim to rebuild trust in Fareham Borough Council’s books after years of giving disclaimed and qualified opinions, with a long‑term goal of a fully clean sign‑off on the accounts.

Conservative councillor for Fareham Park, Fred Birkett, asked how much reliance there was on AI when drawing up the reports and interrogating data from the authority’s systems.

In response, Simon Mathers from EY said machine‑driven tools are already in use but are “human-checked”.

He explained that AI is used to track amendments to the draft financial statements and to help read through long and complex contracts, flagging changes or clauses for staff to review. He added that this process is then always human-verified.

Simon added that the firm does not use AI to process or check data extracted from the council’s ledger systems and does not offshore any of the authority’s information.

The use of AI is currently “fairly limited”, though he acknowledged it is starting to affect the audit profession “like every other area of the world”.

He told councillors that if auditors are to stay efficient and make full use of the technology’s benefits, wider use of AI is likely in future.

Any expansion, he said, would be “subject to approval, discussed with council officers” and brought back to the committee.

Alongside the AI debate, members were briefed on EY’s latest plan for the 2025/26 audit.

The firm is aiming to move the council from past disclaimed and qualified opinions towards an unqualified verdict over several years, focusing on risks around fraud, mis‑classified spending, pension estimates and the valuation of land and housing.

The auditors also reported that, at this stage, they have not identified any “significant weaknesses” in the authority’s value‑for‑money arrangements.

The monitoring of financial sustainability, governance and efficiency will continue ahead of an auditor’s annual report due by the end of November 2026.