Generative AI
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Professional ethics Client data and confidentiality
A CCAB Draft Case Study Says Client Authorization Is Still Required Even When Client Data Is Processed to Create Synthetic Data
In draft case studies on the ethical use of AI, published for consultation in June 2026, the Consultative Committee of Accountancy Bodies sets out a fictional firm's plan to train its own large language model on synthetic data derived from actual client data, and the concerns raised about it.
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The Solicitors Regulation Authority Proposes to Reflect Technology and AI Within Solicitors' Existing Competences Rather Than as a Standalone Competence
In a consultation open from October 8 to December 3, 2026, the regulator of solicitors in England and Wales proposes changes to the statement of the competence it expects of solicitors, among them references to technology and AI in ethics, in research and drafting, and in supervising others.
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When AI-prepared work goes wrong Cases and sanctions
An Orange County Appeals Court Sanctions a Supervising Lawyer Who Says He Reviewed a Petition's Arguments but Not Its Citations
In an order of August 2026, the appellate division of Orange County's superior court in California sanctions two lawyers, one of them the supervising attorney, who did not review the citations, over a petition whose table of authorities listed four cases that "appeared to have been fabricated" by generative AI.
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Evidence and documentation Documenting AI-prepared work
Australia's Fair Work Commission Says People Who Use Generative AI to Help Prepare a Document for One of Its Cases Must Say So, Check It and State That They Did
A guidance note of the Fair Work Commission, published on August 24, 2026 and commencing on October 20, sets requirements for anyone who uses generative AI to help prepare a document to be lodged in one of its cases, and says the checking "must be done by a person."
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When AI-prepared work goes wrong Cases and sanctions
The Sixth Circuit Says Citing Real Cases Did Not Absolve a Lawyer Whose AI-Drafted Briefs Carried False Quotations
In an opinion of April 3, 2026, recommended for publication, the United States Court of Appeals for the Sixth Circuit said that an appointed lawyer, by the lawyer's own admission, used artificial intelligence to draft two briefs and filed them without properly verifying the cited authorities, and ordered that the lawyer not be paid under the Criminal Justice Act for the time spent on the appeal.
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Regulators and standard setters Audit and assurance
The FRC Says Some Audit Firms Are Now Deploying Generative AI to Perform Audit Procedures and Generate Audit Documentation
In its Annual Review of Audit Quality 2026, dated July 2026, the UK's Financial Reporting Council says some firms are deploying generative AI tools to perform audit procedures and generate audit documentation, plans a thematic review of how the largest firms govern its use, and says limited use of GenAI on audits was observed in the past year.
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Professional ethics Judgment and competence
A Draft CCAB Statement Says Professional Accountants Cannot Abdicate Responsibility for Outputs Produced by Their Use of AI
In June 2026 the Consultative Committee of Accountancy Bodies published, for consultation, a draft statement to the accountancy profession on the ethical use of AI. It reminds accountants that they "cannot abdicate responsibility" for outputs produced by their use of AI tools and systems, and it discloses that AI tools were used in preparing the statement itself.
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When AI-prepared work goes wrong Cases and sanctions
The Solicitors Disciplinary Tribunal Struck Off a Lawyer Who Filed Misleading AI-Generated Citations and Repeated the Errors After They Were Pointed Out
In a judgment dated August 25, 2026, the Solicitors Disciplinary Tribunal found that a registered foreign lawyer had filed misleading quotations and citations "in consequence of" his use of generative AI, and had sent further erroneous ones after the errors were pointed out. It ordered him struck off, on this and a separate allegation. The decision is subject to appeal to the High Court, and the order remains in force meanwhile.
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When AI-prepared work goes wrong Liability and insurance
The SRA Warns That Solicitors and Regulated Individuals Who Use AI Remain Accountable for Their Work, Regardless of How It Was Prepared
In a warning notice published on August 17, 2026, the Solicitors Regulation Authority said that solicitors and regulated individuals who use AI in delivering legal services "remain accountable for their work and outputs, regardless of how that work has been prepared," named two areas of particular concern, false or incorrect information in court and other documents, including citations, and client confidentiality, and said that those who do not have proper regard to the notice are at risk of disciplinary action.
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The Texas Bar's Ethics Committee Says Lawyers May Not Bill Hourly for Time Generative AI Saved
In its Opinion 705 of February 2025, the Professional Ethics Committee for the State Bar of Texas says that in most typical hourly arrangements, depending on the agreement, a lawyer will likely be able to charge for the time spent using generative AI, including checking its work, but may not charge hourly fees for the time the tool saved.
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Professional ethics Client data and confidentiality
Confidential or Privileged Information: APESB's Draft Guidance on AI for Forensic Accountants and Valuers, September 2026
A preliminary draft among the papers for the board meeting of Australia's Accounting Professional & Ethical Standards Board on September 4, 2026, says in the first of its illustrative examples that "Confidential or privileged client information should not be entered into public AI tools."
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Cannot Be Delegated to Software: The Texas Accountancy Board on AI and the CPA, August 2026
In its report of August 2026, the Texas State Board of Public Accountancy says a Texas CPA "remains responsible for all work product" and that "Professional responsibility cannot be delegated to software." The state's Public Accountancy Act and the board's Rules of Professional Conduct "do not specifically address generative AI," it says, but "existing professional obligations apply regardless of the technology used."
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Tax authorities and e-invoicing
Always With Skilled Caseworkers Making Final Decisions: HMRC's Transformation Roadmap Update, July 2026
HMRC's update on its Transformation Roadmap, dated July 2026, says the UK tax authority will continue rolling out an AI tool that supports its compliance work, "always with skilled caseworkers making final decisions," and that the government will mandate e-invoicing for all VAT invoices from April 2029.
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Regulators and standard setters Tax
Not a Substitute for Professional Judgment: The IRS Alert on AI in Tax Practice of June 2026
On June 24, 2026, the IRS's Office of Professional Responsibility issued introductory guidelines on AI in federal tax practice. Due diligence, it says, "requires verifying the accuracy of facts, citations, and calculations produced by AI."
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Still in High Demand: ICAEW's Release on AI and Mid-Tier Accountancy Firms, May 2026
On May 22, 2026, ICAEW published a release on its research into mid-tier accountancy firms. More than two-thirds of the firms, it says, felt that AI "would reduce demand for some early-career accountants."
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Not Within the Scope of This Guidance: Generative AI in the US Bank Regulators' Model Risk Guidance of April 2026
On April 17, 2026, three US bank regulators issued revised guidance on model risk management. Generative AI and agentic AI models, a footnote says, "are not within the scope of this guidance."
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Regulators and standard setters Audit and assurance
Risks, Mitigations and Illustrative Examples: The FRC's Guidance on Generative and Agentic AI, March 2026
Guidance dated March 2026 from the UK's Financial Reporting Council takes up generative and agentic AI in audit. It is aimed at "the central technical teams within audit firms who are responsible for the development of generative and/or agentic AI tools and supporting methodology."
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Ownership and vendors Deals and vendors
Inaccurate or Fabricated Content: RELX's 2025 Annual Report on the Risks of Generative AI, February 2026
In its 2025 annual report, RELX, "a global provider of professional information solutions," names "an emerging risk specific to generative AI": the possibility that "models may produce inaccurate or fabricated content."
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When AI-prepared work goes wrong Liability and insurance
Remote to Insureds' Use of AI: A Lloyd's Market Association Survey of Underwriters on AI Loss Scenarios, January 2026
In January 2026, the Lloyd's Market Association released a survey of its members' opinions on AI loss scenarios. Of the four it reports on, professional indemnity, "AI produces erroneous advice/service to clients, causing a loss," scored highest for overall impact.
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Rule 1.5 Does Not Equate Reduced Time With Proportionally Reduced Fees: Virginia's Opinion on Lawyers' Fees and Generative AI, November 2025
In November 2025, the Supreme Court of Virginia approved a legal ethics opinion on fees for work done with generative AI. Hourly fees can only be based on the actual time spent, it says; a non-hourly fee need not fall just because AI cut the hours.
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Auditor-in-Control Checkpoints: What EY UK's 2025 Audit Quality Report Says About AI, October 2025
In its 2025 Audit Quality Report, EY UK says its AI capabilities are "risk-managed, tested and approved against principles in this framework, then released with clear guidance and auditor-in-control checkpoints," the framework being the firm's own. The claims are the firm's.
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When AI-prepared work goes wrong Liability and insurance
Whether They Intend to Cover: A Lloyd's Market Association Report on AI and Errors and Omissions Insurance, September 2025
A report of a committee of the Lloyd's Market Association, published on September 18, 2025, says that a professional who relies on generative AI is "still expected to adhere to the professional standards" of their regulator, and that underwriters "should consider whether they intend to cover losses resulting from reliance on inaccurate GenAI outputs by professional services firms."
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It Is Not a Defense: Utah's 2025 Law on Generative AI in Consumer Transactions and Regulated Services
Utah's S.B. 226 of 2025 says it is not a defense to the violation of a statute its Division of Consumer Protection administers and enforces that generative AI "made the violative statement" or "undertook the violative act." Someone providing services in a regulated occupation must disclose generative AI in a "high-risk" interaction.
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Professional ethics Client data and confidentiality
Very Difficult to Track or Control: Australia's Privacy Regulator on Personal Information and Commercial AI Products, October 2024
In October 2024, Australia's privacy regulator published guidance on using commercially available AI products. Once personal information has been input into an AI system, it says, "it will be very difficult to track or control how it is used."
