At a joint conference of the Polish Agency for Audit Oversight (PANA) and the Polish Financial Supervision Authority (UKNF) – ‘Annual meeting with audit firms auditing PIEs: Audit quality and supervisory perspective on market irregularities’ – Marcin Mikołajczyk, Deputy Chair of the KNF, joined a fireside chat with Jacek Gdański, President of PANA. The discussion was dedicated to, among other things, audit quality, the challenges related to the development of artificial intelligence, and cooperation between the UKNF and PANA.

Marcin Mikołajczyk has highlighted the common goal of the KNF and PANA, namely the goal of ensuring the security of, and confidence in, the financial market. In this context, audit quality is particularly relevant, as it represents an essential aspect of reliability of financial statements. He expressed his positive views on the changes seen in the market, referring to improved quality of statutory auditors’ work, manifesting itself in a reduced number of supervisory reservations and interventions regarding financial statements and opinions from audits. All cases that raise doubt are resolved through supervisory cooperation and clarifications with PANA but – as he stated – are marginal from the market-wide perspective.

A part of the discussion was dedicated to the use of AI. The Deputy Chair of the KNF has stated that the UKNF is developing tools to support, for example, the analysis of big data and the work on documents. He has stressed that the final evaluation of the outcomes generated by AI tools and the decision-making process must remain in the hands of the human being. It is also crucial to ensure information security, for example by using isolated environments. As he pointed out, the development of this technology is inevitable, and the decision not to proceed with its orderly implementation could lead to an uncontrolled use of external tools and the creation of additional risks.

Referring to the financial market, Marcin Mikołajczyk drew attention to the need to monitor the use of AI by supervised entities, especially in areas where algorithms influence decisions regarding specific people, e.g. creditworthiness assessment. Cybersecurity and protection against threats from cybercriminals and hostile states also remain highly relevant. The UKNF prepared recommendations on the review of procedures and safeguards related to the use of AI. The UKNF is analysing the uses of AI in the financial sector, without excluding further supervisory activities in this field.

The talk also addressed the harmonisation of standards at the European and global levels. Marcin Mikołajczyk expressed his positive view on this trend, pointing to the possibility of improving efficiency, reducing legal risks and facilitating operations in foreign markets. At the same time, he stressed that the implementation of common standards required taking into account costs and national specificities.

As his final remark on the importance of the KNF-PANA cooperation, he stated that interinstitutional memoranda of understanding can complement the existing framework for information exchange and improve the efficiency of supervisory work. He has positively assessed the experience of cooperation between the two institutions over the last two years, emphasising that it brings benefits to supervisors, audit firms and the entire financial market.