In the evolving landscape of European regulation, one piece of legislation stands out for its ambition and global significance: the EU Artificial Intelligence Act (Regulation (EU) 2024/1689). For many, this regulation signifies a legal milestone in taming the boundless potential of AI. For two accounting firms – Demetriou & Co. in Nicosia and FinSure & Co. in Frankfurt – it became a compass for ethical transformation and professional reinvention.

This article tells their story – and through it, explores how the EU AI Act is reshaping the accounting and auditing profession in Europe and beyond.

A New Era for Accountants: Regulation Meets Reality

At the heart of Nicosia, Sofia Demetriou, managing partner of a forward-looking accounting firm, received a regulatory notice that would change everything. Her firm’s use of an AI audit platform, ClearAudit, now fell under the scope of a newly implemented law. It was designated a high-risk system, requiring registration, risk management, transparency, and human oversight.

In Frankfurt, Elena Roth, managing partner at FinSure & Co., was facing the same challenge. Her firm’s proprietary AI audit system, SageLens, had to be dissected, explained, and possibly restructured to meet compliance obligations.

Both women stood at a crossroads between innovation and accountability. The AI Act demanded not just compliance – but leadership.

Understanding the Regulation: The EU AI Act in Brief

The EU AI Act establishes the world’s first comprehensive legal framework for the use of artificial intelligence. Its goal? To ensure AI systems are safe, transparent, traceable, non-discriminatory, and human-centred.

Key features include:

• Risk-based classification: From minimal to high-risk, depending on impact.

• Prohibited AI: Such as social scoring and manipulative systems.

• High-risk obligations: Covering sectors like financial services, auditing, and compliance.

• Transparency and human oversight: Especially for AI systems interacting with users or making significant decisions.

• Fines: Up to €20 million or 7% of global turnover for non-compliance.

For accountants and auditors, this is not theoretical. It is immediate and material.

High-Risk AI in Practice: What Makes It So?

Accounting and auditing firms using AI tools for:

• Transaction analysis

• Fraud detection

• Audit report generation

• Financial risk scoring

• AML transaction monitoring

are likely deploying high-risk AI under the regulation.

Sofia’s ClearAudit system, for example, analysed financial data, flagged anomalies, and supported auditors in drafting opinions. Despite not making final decisions, its influence on judgments rendered it high-risk.

The result? A full compliance overhaul: registering the system, maintaining logs, proving human oversight, and building explainability tools.

Ethics, Oversight, and the Human Lens

A cornerstone of the AI Act is human oversight. As Sofia’s team realised, AI must remain a tool – not a decision-maker. Systems like ClearAudit and SageLens were redesigned to allow:

• Manual override of AI recommendations

• Justification logs for all overrides

• Dual-review procedures (junior and senior auditors)

• Feedback loops to refine AI models with human input

At FinSure, this led to the creation of a dedicated AI Governance Committee and Model Oversight Officers, formalising the responsibilities of both technologists and auditors.

Explainability and Client Trust

Regulators and clients alike demand more than outputs – they demand explanations.

Both Demetriou & Co. and FinSure developed “AI Explainability Briefs”: human-readable summaries of how AI conclusions were reached. These were accompanied by visual dashboards and narrative audit trails, aligning with Articles 13 and 16 of the AI Act.

This wasn’t just compliance. It became a differentiator. Clients increasingly valued firms that could combine automation with transparency.

AI Literacy and Culture Change

A critical takeaway from both stories is that AI transformation is a people issue.

Both firms launched internal AI literacy programmes, teaching:

• Basics of machine learning

• Identifying algorithmic bias

• Validating AI findings

• Ethical scepticism

They reframed their roles – not as auditors replaced by AI, but as professionals enhanced by it. As Sofia told her team: “AI is your assistant, not your conscience.”

Strategic Advantages: Turning Compliance into Opportunity

Demetriou & Co. branded their AI services as ClearAudit Insight+, combining efficiency with governance. FinSure developed Recon, an AI-based AML system capable of detecting complex laundering schemes, triggering intervention in real-time.

These innovations led to:

• New client service lines (e.g., AI audits, model assurance)

• Internal AI ethics protocols (e.g., Contextual Integrity Framework)

• Public reports and dashboards on AI usage and oversight

• Both firms were no longer just compliant. They were competitive.

The Role of the Auditor is Evolving

Through real-world use cases, one truth emerged: the audit profession is being redefined. The modern auditor:

• Interprets AI outputs with scepticism

• Validates model assumptions and biases

• Advises clients on AI governance

• Trains alongside technologists

• Publishes AI impact metrics

This evolution is accelerated by external scrutiny. Firms are now expected to submit AI Assurance Reports to regulators, complete with audit trails, training data lineage, risk logs, and conformity assessments.

Looking Forward: The Future of AI in Finance

The EU AI Act is just the beginning. Sofia and Elena’s journeys reveal what lies ahead:

• Generative AI will raise questions about authorship and accountability.

• Integrated ESG-AI dashboards will track both financial and sustainability risks.

• AI ethics panels will become standard in firms deploying advanced systems.

• Clients will ask for transparency scores, not just engagement letters.

As FinSure aptly declared in a client pitch: “We audit minds – digital ones.”

Conclusion: A New Social Contract

Both stories converge on a profound insight: AI must be auditable – not just in its results, but in its reasoning.

Sofia framed it best at her firm’s annual retreat:

“We will never lose sight of the human judgment that defines our work. But with AI by our side – and the law guiding our path – we can build a profession fit for the future.”

In a world moving at algorithmic speed, the EU AI Act reminds us that the truth must always be traceable.

And that is the legacy of the modern accountant.

This article was prepared by the AccountingWise.