Starting August 2, accounting firms will no longer be allowed to use certain AI-powered tools thanks to the EU AI Act.
This includes software that scores client risks, detects fraud, flags unusual transactions or automates onboarding. If AI is part of how the tools works, you may need to stop using it or meet strict new rules.
Most firms are not ready for this. Many do not even know which tools use AI or what risks they carry. But under the new rules, there is no excuse.
So, what exactly changes on August 2? Let us break it down.
The AI Countdown Begins
The European Union Artificial Intelligence Act kicks (EU AI Act) in on 2 August 2025. And it is going to change how accountants use AI.
Under this new rule, you will be responsible for how AI is used in your firm. Even if the software was built by others, the liability is still yours.
This marks the need to rethink how accountants, bookkeepers and tax advisers handle data, assess risks and manage records.
Also, some AI tools will be banned from day one. And for other AI tools, firms must assess their risk levels and apply proper documentation and oversight.
This is the start of something big on how AI is used and it is the right time to get ready.
What Changes on 2 August with the EU AI Act
On 2 August 2025, the EU AI Act officially begins. The first phase brings in two major changes for accounting firms.
- Ban on Prohibited AI Systems – Certain types of AI systems will no longer be allowed in EU. These include tools that try to manipulate how people behave, target vulnerable users or process biometric data in harmful way. Such systems are now off-limit whether used for clients or internal operations.
- Firms Must Review the AI They Use – Even if your firm did not build the AI tool, you are still responsible for how it is used. If you use software that scores client credit, flags unusual transactions or automates risk checks, you need to find out if it is “high-risk” under the EU AI Act. If the AI helps to make decisions that affect people’s rights, money, or access to services, you must understand how the AI work, apply more oversight, and keep proper documentation. You cannot pass the blame to the vendor. Every firm must know what AI does, how it works and what risk it brings.
Remember, tools that once helped you save time can now come with legal risk if you do not check them properly.
Accountability Goes Beyond Vendors
You cannot blame the software maker now under the EU AI Act. Your firm is responsible for knowing what the AI tools does and how it works.
Here are the steps every accounting firm should take now:
- Map all AI tools your firm uses across every software and platform
- Classify the risk of each AI tool. Find out if it is “high-risk” and needs special handling
- Ask vendors for documentation about the AI’s training data, how it behaves and what controls they have in place
- Assign someone internally to take charge of AI compliance. This person should make sure human review happens where it matters
- Keep records that show you are following the rules and reviewing AI outputs responsibly
Remember, AI results often need human checks. That means some of the expected time savings will be lost to careful insights, especially in areas like reconciliations, reports and audits.
AI Compliance Starts at Top
The EU AI Act not just target tech teams or compliance staff. It holds firms accountable at the top level.
Senior leaders must now understand where AI is used in their workflows, what risks it introduces, and who is responsible for managing it. The law also expects firms to assign oversight to people with real authority, not just anyone with a tech title.
This means partners and directors must be involved in AI decisions. From approving governance policies to understanding risk categories, leadership needs to know what is happening under the hood.
In short, if you use AI, your partners need to speak the language. If you use AI, you will need to follow the EU AI Act.
Conclusion: Act Now or Fall Behind
The EU AI Act is no longer a future concern. It starts on 2 August and waiting could put your firm at risk.
Even if the AI is hidden inside a third-party tool, your firm is still responsible. You need to know what it does, how it works and what risks come with it.
Firms that act early will have more control and fewer surprises. Those who ignore it could face fines, penalties, damaged reputation, or worse lost business opportunities.
So, now is the time. Know your tools. Ask the tough questions. Keep records and stay ready.
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