HONG KONG SAR -
Media OutReach Newswire
- 27 June 2024 - Artificial intelligence (AI) is already being widely
adopted in companies' financial reporting processes, with a majority of
businesses piloting or using it, and this is set to grow to almost
universal levels over the next three years, according to a global
research from KPMG. At the same time, companies expect AI to be
increasingly used by their auditors to drive more proactive and
predictive audits.
KPMG's research titled
AI in financial reporting and audit: Navigating the new era,
surveyed 1,800 companies across six industries in ten major markets to
understand how financial reporting executives feel AI adoption is
progressing within the finance function, its impact on internal finance
teams, and expectations for external auditors.
Alan Yau, Audit Innovation Leader, Partner, KPMG China, says:
"The adoption of AI in financial reporting is gaining significant
momentum in Greater China, with the use universally applicable to both
auditors and clients, leading to greater productivity for financial
reporting teams and enhancing talent acquisition and skills
development."
Among regions, companies in North America are moving at the fastest pace
with 39% of companies in the region selectively or widely adopting AI
for financial reporting, followed by Europe (32%) and Asia Pacific
(29%).
In terms of sectors, telecoms and technology businesses have made the
most progress, with 41% responding that they are now selectively or
widely adopting AI within their financial reporting processes, followed
by energy, natural resources and chemicals (35%). Consumer products and
retail businesses, however, trail other industries (26%).
Companies are investing strategically and substantively in AI. According
to the research, AI now accounts for 10% of the IT budget and is set to
rise significantly. All surveyed companies said their Boards have taken
strategic action regarding AI.
Nearly two-thirds of respondents (64%) say they expect auditors to have
the role of conducting a more detailed review of the control environment
in relation to their use of AI in financial reporting. Over half (53%)
foresee auditors carrying out an AI governance maturity assessment,
while a third expect to ask them to provide third-party attestation over
the use of AI technology. However, this is an area where regulation
needs to move and maintain pace with the rapid pace of development of
use of AI in financial reporting and in auditing.
Generative AI, as a relative technology newcomer, fewer organizations
are piloting or using it now (43%) compared to 'traditional' AI – but
adoption is set to accelerate significantly over the coming three years.
Indeed, over the next 12 months leaders are set to prioritize genAI for
financial reporting more than any other technology. Almost half (47%)
will prioritize it, ahead of data & analytics (44%), process mining
(39%) and cloud (36%).
Alan Yau added: "Looking ahead, businesses in Greater China are
increasingly recognizing the immense potential of generative AI. In the
realm of financial reporting, AI emerges as a formidable tool that not
only enhances decision-making with insightful data analysis but also
complements human expertise with its speed and precision. By automating
routine tasks, AI enables financial professionals to devote more time to
strategic planning and fostering client relationships. This symbiotic
relationship between AI and human professionals is revolutionizing
financial reporting, elevating service standards, and delivering
unparalleled value to companies and their stakeholders."
Businesses are very cognizant of the risks of AI, with data security,
privacy and ethical issues the top concerns. In general, there are
currently more concerns over genAI than traditional AI, including
cybersecurity issues and copyright & IP alongside other areas such
as privacy and hallucinations. Managing the risks and taking an ethical
approach to AI implementation is critically important.