KPMG: Navigating the AI Era in Financial Reporting
In its latest survey, Navigating the AI Era in Financial Reporting, leading consultancy KPMG outlines the opportunities, risks and investment trends financial reporting leaders expect to happen when it comes to AI adoption.
Most strikingly, all US financial reporting leaders surveyed report that they expect to be either piloting or using AI in financial reporting, up from 71% that do so today.
What’s more, 97% of those surveyed plan to be leveraging Gen AI for reporting needs within the same timeframe.
The survey was conducted among 1,800 companies from across 10 major markets and features key perspectives and findings from 300 US respondents. It comes after KPMG launched its new Digital Finance platform to provide financial professionals industry-wide with a modern technology stack.
KPMG: Expect more AI investment in financial reporting
With AI set to take centre stage for financial reporters over the next three years alone, KMPG expects IT investment in AI-related activities to expand in the short term too – particularly for Gen AI capabilities, which looks set to be the top priority for financial reporting professionals next year.
US companies are already spending 10.1% of their IT budget on AI-related activities, and this looks set to grow further as the need to onboard more Gen AI capabilities grows.
Alongside increased funding, KPMG’s latest survey finds IT leaders at US businesses are focusing more time on best practices for navigating AI risk.
This includes upskilling efforts for external auditors to not only use AI and Gen AI in audit but also have the professional judgement to evaluate control environments. An example would be the ability to conduct third-party attestation over companies’ use of AI, as well as providing insights into a company’s AI governance maturity.
Scott Flynn, KPMG US Vice Chair - Audit, says: “It’s clear that financial reporting leaders are rapidly accelerating investments to use AI and Gen AI to not just gain efficiencies but create more value for their organisations by predicting trends and identifying emerging risks.
“Understanding the range of complementary investments in cloud, data and governance is critical for both financial reporting leaders and external auditors to mitigate risks from this rapid transformation.”
Benefits & risks of AI for financial reporters
With plans across US companies to scale AI and Gen AI capabilities in the financial reporting function clear, KPMG reports that 73% of businesses will see increased benefits in real-time risk insights, fraud and control weakness.
In addition, 67% will see increased data accuracy and reliability, while 62% will be able to reap the benefits of lower costs.
On the other hand, despite plans to press ahead with onboarding AI and Gen AI capabilities, 56% of KPMG’s respondents noted data security and privacy concerns as the biggest barriers to successfully implementing this new technology.
In addition, 46% of organisations surveyed are concerned about limited skills and talent for the successful use of Gen AI. Meanwhile, 44% express concerns about the quality of their data for Gen AI to be best leveraged, and 43% say they need more funding and investment levels to upscale their technology.
So, while barriers remain to the successful adoption of AI and Gen AI in financial reporting, the industry is unanimous in its belief in AI and Gen AI to drive efficiencies and create more organisation-wide value.
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