Aipedia: Accountants

AI for year-end accounts: duties and PI

Aipedia, by the Apex broking team · Last reviewed 2026-10-27

Accountants can use AI to draft year-end accounts, but the Code still requires them to check the output is appropriate before it is used. A misstatement or missing disclosure in signed accounts is a classic route to a negligence claim against the preparer.

Part of: AI in Accountants

In short

AI tools can map a trial balance to statutory formats, draft notes and suggest disclosures in minutes. Under the ethics Code, enforced by ICAEW from 1 July 2025, the accountant must have the competence to use the tool, decide whether its output is appropriate for the intended purpose (R320.11) and explain the limits of the work (R113.3). Unchecked output can produce misclassified balances, wrong comparatives or missed disclosures that lenders, buyers or HMRC rely on. A PI policy usually responds to the resulting negligence claim, subject to its terms.

How accountants use AI on year-end work

Practice software increasingly uses AI to map trial balance codes to the formats in company law, roll forward prior-year notes, draft accounting policies and suggest disclosures based on the client's figures. Some firms also paste extracts into a generative AI chatbot to draft directors' report wording or explain a movement. The appeal is obvious in a busy filing season: the first draft is ready faster, and staff spend time reviewing rather than typing.

The problem is that a statutory accounts pack looks finished long before it is right. AI output is fluent and well formatted, which makes errors easy to miss on a quick read.

The duties that apply

No body has an AI-specific rule for accounts preparation, but the ICAEW Code of Ethics, aligned with the IESBA technology revisions and enforced from 1 July 2025, applies directly:

113.1 A3: competence includes understanding technology-related developments, so staff need to know how the tool maps and what it cannot see.
R320.11: before using technology output, decide whether the use is appropriate for the intended purpose.
300.6 A2: the data available might not be sufficient for the technology to work well, for example an incomplete or unreconciled trial balance.
R113.3: explain the limitations of the work to the client.

Where the accounts feed a tax return, the PCRT AI guidance also applies: treat output as a junior colleague's draft (para 3.4) and remember you remain ultimately accountable (3.5).

What can go wrong

Illustrative scenario: a practice uses an AI mapping tool to prepare accounts for a small company. The tool classifies a director's loan as a trade creditor and drops a related party note because the prior-year file had none. The reviewer checks the totals but not the notes. The accounts are filed, and the client later uses them to support a bank facility. When the error emerges, the bank questions the client, the client faces costs to restate, and the client blames the practice.

Other common failure points are wrong comparatives after a reclassification, going concern wording copied forward without reflecting current trading, and disclosures that fit the wrong size regime. Errors like these often surface months later, when a buyer's adviser, a lender or HMRC reads the accounts closely, by which time the client may have made decisions on them. The longer the gap, the larger the potential loss and the harder it is to show what the reviewer actually checked.

How PI usually responds

A claim alleging the accounts were negligently prepared is the type of claim accountants' PI exists for, and a civil liability wording usually responds whether the error came from a person or a tool, subject to the policy terms and excess. ICAEW firms must hold cover on the approved minimum wording under the ICAEW PII Regulations, with a minimum of £2m, or 2.5 times fee income (floor £250,000) where gross fee income is under £800,000. The rules say nothing about AI. See accountant negligence claim examples and the ICAEW PI requirements.

Practical controls

Reconcile the trial balance before the tool runs, not after.
Review each note and policy, not just the primary statements, against a disclosure checklist.
Check comparatives and any reclassified balances line by line.
Record which tool was used, who reviewed the output and what was changed.
Do not put client data into public AI tools without consent.
Use AI technical research with care when deciding disclosure points, and keep management accounts commentary under the same review standard.

How Apex helps

Apex arranges PI for accountants and can review whether your wording treats AI-assisted accounts work like any other professional service. See the accountancy AI overview and the AI guidance explainer.

Sources

Frequently asked

Can I file accounts drafted by AI?

Yes, if a competent person has reviewed them and is satisfied they are appropriate for their purpose. The Code requires that judgement before relying on technology output. Filing an unreviewed draft would be hard to defend if a misstatement later caused a loss.

Who is liable if the AI mapping tool gets a balance wrong?

The practice that prepared the accounts will usually face the client claim. Any rights against the software vendor depend on your contract with it. The PCRT guidance and the CCAB draft Statement both say accountants remain accountable for AI output.

Does my PI policy need to mention AI for year-end work to be covered?

Not usually. Civil liability wordings generally cover negligence in the professional services you describe to insurers, whatever tools you use, subject to the terms. Check for any AI or technology exclusion and tell your broker how AI is used.

What records should I keep for AI-drafted accounts?

Keep the tool name and version, the input trial balance, the output draft, the reviewer, and the changes made. The PCRT guidance suggests an audit trail of AI use, and the CCAB draft asks firms to record judgements and safeguards.

Check your PI covers how you use AI

Tell us about your firm and the work you do. A broker will review how your current PI treats AI-assisted work, or arrange new cover. No fee for a quote. Or call 0117 325 0027.

Start a PI quote Request a callback

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.