The National Audit Office (NAO) has warned that artificial intelligence is set to significantly reshape the audit profession, with junior roles particularly affected as automation takes over more routine tasks.
Appearing before MPs on the Public Accounts Committee, auditor general Gareth Davies discussed the future of audit, the potential impact of AI on employment, and the NAO’s plans to generate income by leasing space in its refurbished Westminster headquarters.
Staffing Levels and Automation Concerns
The session began with committee chair Geoffrey Clifton-Brown questioning Rebecca Sheeran, the NAO’s chief operating officer, about projected staffing reductions and whether they were realistic given an expanding workload.
Clifton-Brown asked:
‘You’re budgeting for less staff, going down from 1,122 to 1,115 and eventually to 1,098 in 2028-29. Is this level of staffing realistic given you’ve got an increase volume of work?’
Sheeran explained that current staffing plans were designed to support a shift away from outsourcing, while allowing flexibility as audit practices evolve.
She told MPs:
‘The number of staff we’re budgeting for in the year ahead is 1,122… in order for us to continue with the insourcing of work which has historically been contracted out.
‘In the years that follow, our current expectation is that we will gradually reduce some of our staff cost numbers as part of a productivity and efficiency plan.
‘Of course, our estimate in future years is subject to a very thorough process… we need to stand back through that process and consider the skills and capabilities we will need as the nature of audit changes.’
Impact on Entry-Level Roles
Clifton-Brown pressed further on how these changes might affect junior auditors, suggesting automation would most likely replace simpler, entry-level tasks.
He said:
‘You talk about that reduction of staff from 2027-28, I assume that’s of the more junior staff, because it’s those simpler tasks you’re going to take from the lower trained auditors… which gives me a worry about the future.
‘However well AI does, you will still need experienced auditors to check the AI is producing the right answers.’
Sheeran acknowledged the challenge and said the NAO was actively rethinking how it trains and develops staff.
She responded:
‘We are doing a great deal of thinking about exactly that, as I think all organisations that are looking at the future of accounting and audit are doing.
‘In this year’s estimate we have slightly reduced the number of trainees, we are budgeting for 55, we think that is a good number that sets us up to have the skills that we will need for a few years’ time.
‘Whilst a lot of the more routine tasks are the things that will be taken away potentially with increased automation, we are not assuming that future efficiencies will all come from our trainee cadre.
‘We are thinking a lot about how we skill our people for the future, and that includes different thinking on how we can train people to focus on judgments, things that only humans can do.
‘Whilst there is great scope for automation, we are really conscious that audit is still a profession about judgment. We need to make sure people have those right skills and everything that is generated through AI is subject to meaningful human review.’
“Audits Will Be Radically Different”
MP Rupert Lowe raised the broader use of AI in audit, noting its ability to reduce manual work.
He commented:
‘As you say AI is not perfect, but it does cut out a lot of leg work’.
Davies agreed, predicting major change across the profession within a short timeframe.
He told the committee:
‘On AI we are very clear, the way we are doing our audits will be radically different in just five years’ time from now.
‘It’s already changing, and the reason you can be confident that this is a real change is that our teams are telling us they see a need for a skill mix. When the practitioners are telling you that, then you know this is real.
‘We’ll never be the leading edge compared to global enterprises, but we see ourselves as a fast follower. In other words, which bits are really delivering benefits? Let’s get hold of those and implement them.’
Bringing Audits Back In-House
The committee also examined the NAO’s decision to reduce its reliance on private audit firms. MP Clive Betts asked why more audits were now being carried out internally.
Davies said the move was driven by cost and improved internal capability.
He explained:
‘It’s straightforward, value for money. As part of our productivity push we have really challenged why we outsourced any of our work. Sometimes it’s because we don’t have the volume of expertise needed.
‘But we were outsourcing more than the ultra-specialist areas, and the [audit] firms’ prices have changed overtime, and our quality has improved, so there is no quality reason to outsource standard audits, we can do it more cost effectively.
‘We are essentially reducing from about 20% outsourced to about 15%, it’s still a significant amount, but just that reduction is saving us money each year and that’s the main reason for the trend you’ve spotted.’
Office Refurbishment and Rental Income
Before the hearing concluded, MPs turned their attention to the NAO’s refurbished headquarters near Victoria Station. The Grade II-listed 1930s art-deco building has undergone extensive upgrades, including a new reception area, modernised office space and a business lounge.
Clifton-Brown asked whether the NAO had been able to secure tenants for unused floors.
Sheeran confirmed:
‘We’ve got eight floors out of an available 10 at the moment which are fully occupied, we expect to have the additional floors occupied in April which will generate an additional £1m income.’
The chair concluded with a light-hearted remark:
‘I’m sure a lot of landlords would like to be in your position, so well done’.
As the NAO prepares for a future shaped by automation, its leadership made clear that while AI will reduce manual audit work and reshape junior roles, human judgment will remain central to the profession. The challenge will be ensuring the next generation of auditors is trained for a radically different audit landscape where technology supports, rather than replaces, professional expertise.
