Neftaly regulation of augmented intelligence in accounting policy development

Objective:
To establish a regulatory framework governing the use of augmented intelligence (AI) in the formulation, review, and implementation of accounting policies, ensuring that such technologies enhance decision-making without compromising accountability, transparency, or ethical standards.

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1. Scope and Applicability

• Applies to all accounting entities, including public, private, and governmental organizations, that employ augmented intelligence systems in policy development, interpretation, or advisory processes.
• Covers AI tools used for:
  • Policy drafting and recommendation.
  • Regulatory compliance analysis.
  • Risk and scenario modeling.
  • Decision support in financial reporting and accounting standards application.

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2. Governance Requirements

• Organizations must maintain a governance framework for AI integration in accounting policy development, including:
  • Oversight by a qualified board or committee with expertise in accounting, technology, and ethics.
  • Clear delineation of human accountability for policy decisions informed or generated by AI.
  • Regular review and validation of AI recommendations against established accounting standards and regulatory requirements.

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3. Transparency and Explainability

• AI systems must provide explainable outputs; policy recommendations must include:
  • The data sources and assumptions used.
  • A rationale for conclusions and suggested policy actions.
  • Documentation sufficient for independent review by auditors or regulators.

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4. Data Quality and Integrity

• Augmented intelligence must be trained on accurate, complete, and up-to-date datasets.
• Entities must implement controls to:
  • Detect and correct errors or biases in AI-generated insights.
  • Ensure alignment with relevant accounting standards (e.g., IFRS, GAAP) and jurisdictional regulations.
  • Maintain audit trails for all AI-assisted policy decisions.

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5. Ethical and Risk Considerations

• Organizations must assess ethical, operational, and reputational risks associated with AI-driven policy development, including:
  • Bias or discrimination embedded in AI recommendations.
  • Overreliance on AI outputs without human validation.
  • Conflicts of interest arising from automated recommendations.

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6. Audit and Compliance

• Regular audit procedures must verify that AI-assisted policy decisions:
  • Comply with regulatory and professional standards.
  • Are traceable to responsible decision-makers.
  • Reflect proper use of augmented intelligence without bypassing human oversight.
• Non-compliance must be reported to the regulatory authority, with remedial actions clearly defined.

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7. Continuous Monitoring and Improvement

• Entities must establish mechanisms for ongoing evaluation of AI systems, including:
  • Monitoring AI performance and accuracy in policy development.
  • Updating AI models as accounting standards or regulations evolve.
  • Incorporating stakeholder feedback, including auditors and regulators.

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8. Regulatory Oversight

• Neftaly will:
  • Issue guidelines for the safe and effective deployment of AI in accounting policy development.
  • Conduct inspections and audits to ensure compliance.
  • Maintain a registry of approved AI tools and methodologies for policy advisory use.

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Summary:
The regulation balances innovation with accountability, ensuring that augmented intelligence enhances policy development while maintaining human oversight, ethical integrity, and regulatory compliance.

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