The Audit Podcast

Episode: IA on AI – Building Stronger AI Governance Frameworks
Host: Trent Russell
Date: September 10, 2025

Overview

In this episode, host Trent Russell delves into the rising importance of robust AI governance frameworks within internal audit departments. He explores recent legal, ethical, and operational challenges posed by AI, urges auditors to shift from hype to responsibility, and offers practical advice for getting organizational buy-in and budget for governance initiatives.

Key Discussion Points & Insights

1. IP Infringement & AI Image Generators

• Legal Risk in AI Use:
  Trent opens by referencing a current lawsuit: Warner Brothers suing Midjourney, an AI image generator, for copyright infringement due to the generation of images of iconic characters like Superman and Bugs Bunny.

  • “If you are in your organizations and there is some kind of copyright issues and using AI, I think we're going pretty naturally: One, who cares? It's easy for us to do, right? It makes the job easier. I'm probably going to do it anyway. And then two, well, the tool's giving it to me. It's on them, not on me.” [04:10]

• Internal Audit Implications:

  • Auditors should review how their organization uses generative AI, particularly for potential IP compliance issues.
  • Policies and training should be updated to prevent unauthorized use of copyrighted material.
  • Ongoing staff education is crucial, as many still lack understanding of how these tools work.

2. AI Governance Training as a Top Priority

• Rushed Implementation Risks:
  Trent shares an anecdote about a large organization deploying a new AI tool with just a month's notice, unprepared employees, and the critical need for comprehensive training.
  • “AI governance training is still going to be absolutely critical for everyone from wealth professional CA banks, shift focus from Genai buzz to responsible standards study fines.” [08:00]

3. Responsible AI: Business & Audit Imperative

• Industry Shift from Hype to Accountability:
  Recent research by FICO and Corinium Global Intelligence reveals financial institutions are prioritizing responsible AI frameworks over mere adoption.

  • “Financial institutions worldwide are dialing back the hype around Gen AI and putting more weight on responsible AI frameworks ... as firms seek measurable value and greater accountability from their deployments.” [09:10]

  • Dr. Scott Zoldi (FICO's Chief Analytics Officer):
    “Responsible AI extends beyond risk mitigation. It's a business imperative.” [10:10]

• Tangible ROI:

  • Over 75% of surveyed executives say unified platforms and business/IT alignment could boost AI ROI by 50%+.
  • 56% of CAOs/CAIOs believe responsible AI standards will have significant impact on returns.

4. Escalating AI Ethical Breaches & Urgence for Governance

• Sharp Rise in Incidents:
  Newly published reports from McKinsey, OECD, and Rand show ethical and operational issues with AI have doubled in two years.

  • “It also showed that ethical and operational issues involving AI have increased over twofold since 2022.” [12:40]

• Key Risks Recorded:

  • Cheating scandals, biased recruitment, cybersecurity threats, lack of accountability, transparency, and fairness—all highlight governance gaps.

• Resource Constraints Are Not Excuses:
  Trent emphasizes that lack of budget or internal expertise are not acceptable reasons to ignore AI governance projects.

  • “If you go, well, we don't have the budget for that, that's not an excuse. It's your job. If you're leading the audit department to get more budget, those things are not set in stone.” [15:00]

5. Making the Business Case & Securing Budget

• How to Present to Leadership:

  • Trent advises audit leaders to prioritize AI governance projects in year-end reporting and committee materials—potentially even making it the sole slide for off-cycle budget requests.
  • “I would say drop it all, I don't care. We're not taking any of that stuff. I'm going to go to them with a piece of paper that says 'AI Governance Advisory project. We need more budget.' And that would be it.” [16:30]

• Addressing Discomfort & Past Rejection:

  • Acknowledges that many CAEs have faced rejection before but must persist since, “This is the biggest thing right now. We have to, got to get this under control.” [17:30]

• Practical Help—Audit Podcast Episode 233:
  Suggests listening to a previous episode for step-by-step guidance on getting more budget (with David Hill, former CEO of SWAP Internal Audit Services).

  • “We had him on because I know this is a problem for CAEs and audit leaders is trying to get more budget ... So if you're in that position, you're struggling to get more budget, check out that episode 233.” [18:00]

Notable Quotes & Memorable Moments

• Trent on IP Compliance:
  “There's more coming out around IP infringement and that's something that we definitely need to be aware of how big a risk this is in your organization depending on the industry you're in.” [04:50]

• Trent on Organizational Readiness:
  “Imagine having like this organization, 20,000 plus employees and then going, 'Hey everybody, you got a month to figure this out because we're going to push the button and you're all going to get it.'” [07:20]

• Dr. Scott Zoldi (FICO):
  “Responsible AI extends beyond risk mitigation. It's a business imperative.” [10:10]

• Trent on Audit Priorities:
  "If you do not have AI governance as an advisory project, as an audit project ... you absolutely have to. You still have a few months to get it in by the end of the year, but if not, ... it should be top of the list going into 2026." [12:00]

• Trent on Evidence-Based Budget Requests:
  “If you need proof, almost every episode of this show ... is about these stats speaking to the importance of AI governance. ... Just look for the percentage sign. Gather that up, put it together ... and go look. Here's the proof. We got to do something about this.” [19:30]

Important Timestamps

• [00:00–03:23] – Conference announcement and episode kickoff
• [03:24–07:45] – Warner Brothers v. Midjourney, copyright/IP risks, implications for audits
• [07:46–09:08] – The need for better AI governance training and organizational readiness
• [09:09–12:36] – Industry research on the ROI of responsible AI and governance frameworks
• [12:37–14:58] – Doubling of AI ethical breaches, resource constraints, and audit obligations
• [14:59–19:17] – Budget advocacy and making the business case for AI governance
• [19:18–End] – How to use stats and prior episodes to reinforce audit priorities

Tone & Language

The episode retains Trent’s candid, practical tone—mixing industry headlines, personal anecdotes, pointed advice, and a sense of urgency. The language is direct, informal, and focused on actionable steps auditors can take right now.

Summary Takeaways

• AI governance is now business-critical for audit departments, with IP and ethical risks rapidly escalating.
• Training remains insufficient—most organizations are underprepared for safe, responsible AI rollouts.
• Responsible AI isn’t just ethical—it's ROI-positive and essential for future business credibility.
• Audit leaders must push for budget and resources, using both hard statistics and case anecdotes to build their case.
• Practical resources are available (e.g., prior podcast episodes with experts like Dave Hill).

“This is the biggest thing right now. We have to, got to get this under control.” – Trent Russell [17:30]