Making agentic AI explainable and auditable

Agentic AI promises operational speed, yet in finance, opaque decision paths hinder regulatory auditability. We address this autonomy paradox with a knowledge-enabled explainability (KEE) design theory that makes compliance an intrinsic, explicitly governed system property. KEE decouples probabilistic learning from an explicit, rule-governed reasoning layer, relocating epistemic uncertainty from opaque model inference to a semantic structure that can be inspected, contested, and updated. This enables ante-hoc structural control through a semantic, programmable graph that encodes regulatory mandates as executable, inspectable constraints. The theory specifies three design principles: structural knowledge codification, topological reasoning scaffolding, and adaptive synchronization. It also introduces six guidelines that operationalize regulator-acceptable, path-based audit trails. A longitudinal study of a multinational fintech platform provides naturalistic evidence that KEE can support high-velocity operations while producing path-based audit trails and accommodating controlled changes to regulatory logic. The study contributes to design science by theorizing auditable autonomy as ante-hoc structural control, specifying the entity-concept-event paradigm as its ontological mechanism, and formalizing this mechanism as a prescriptive design theory for regulated agentic AI.

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Publication Details

Journal
Journal of Information Technology
Published
2026-11-03
DOI
https://doi.org/10.1177/02683962261508077
Primary Topic
Explainable Artificial Intelligence (XAI)
Type
article
Field-Weighted Citation Impact
0.00
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article

Making agentic AI explainable and auditable

Jonathan J. M. Seddon, Gongtao Zhang, Jimmy Huang, Miao Wang
Journal of Information Technology
Explainable Artificial Intelligence (XAI)
article

Making agentic AI explainable and auditable

Jonathan J. M. Seddon, Gongtao Zhang, Jimmy Huang, Miao Wang
article en

Abstract

Agentic AI promises operational speed, yet in finance, opaque decision paths hinder regulatory auditability. We address this autonomy paradox with a knowledge-enabled explainability (KEE) design theory that makes compliance an intrinsic, explicitly governed system property. KEE decouples probabilistic learning from an explicit, rule-governed reasoning layer, relocating epistemic uncertainty from opaque model inference to a semantic structure that can be inspected, contested, and updated. This enables ante-hoc structural control through a semantic, programmable graph that encodes regulatory mandates as executable, inspectable constraints. The theory specifies three design principles: structural knowledge codification, topological reasoning scaffolding, and adaptive synchronization. It also introduces six guidelines that operationalize regulator-acceptable, path-based audit trails. A longitudinal study of a multinational fintech platform provides naturalistic evidence that KEE can support high-velocity operations while producing path-based audit trails and accommodating controlled changes to regulatory logic. The study contributes to design science by theorizing auditable autonomy as ante-hoc structural control, specifying the entity-concept-event paradigm as its ontological mechanism, and formalizing this mechanism as a prescriptive design theory for regulated agentic AI.

Journal of Information Technology
University of Nottingham Ningbo China (CN), University of Nottingham (GB), Audencia Business School (FR)
Openalex Percentile: Top 16%
Explainable Artificial Intelligence (XAI)
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