KPMG

The September 2024 edition of ‘The Hub’ is highlighting a report from KPMG titled ‘AI in financial reporting and audit: Navigating the new era’ which focus integration of AI and financial reporting & auditing. 

Some key points from the report are as follows-

1. AI Adoption in Financial Reporting:
   • 72% of companies are currently piloting or using AI in financial reporting.
   •  99% of companies expect to be using AI in financial reporting within three years.
   • The technology and telecom sector leads in AI adoption, followed by energy, natural resources, and chemicals.
     
      
2. Investment and Strategic Importance:
   • AI accounts for about 10% of IT budgets on average, with plans to increase by 25% over the next year.
   • 100% of company boards have taken strategic action regarding AI.
     
      
3. Generative AI (GenAI):
   • 57% of companies plan to implement GenAI for financial reporting within three years.
   • GenAI is prioritized over other technologies for financial reporting.
     
      
4. Benefits of AI in Financial Reporting:
   • Top benefits include predicting trends, real-time risk insights, better data-enabled decisions, and increased data accuracy.
   • AI is also improving employee productivity and helping attract talent.
     
      
5. Auditor Expectations:
   • 82% of companies believe their auditors are ahead or equal to them in AI adoption.
   • Companies expect auditors to use AI for improving efficiency, developing proactive processes, and gathering value-added insights.
   • 64% expect auditors to conduct more detailed reviews of AI control environments.
     
      
6. Challenges and Concerns:
   • Main concerns include data security, privacy, ethical issues, and uncertain ROI.
   • For GenAI specifically, copyright, cybersecurity, and data privacy are major concerns.
     
      
7. AI Maturity and Leadership:
   • The report identifies "Leaders" (24% of companies) who are more advanced in AI deployment.
   • Leaders are more likely to have implemented best practices like cloud migration, standardization of workflows, and paperless bookkeeping.
     
      
8. Future Outlook:
   • The report suggests that AI will transform financial reporting and auditing, moving from the 'digital age' to the 'AI age'.
   • Companies expect their auditors to lead in AI transformation and provide support for safe and responsible AI rollout.

The report concludes by emphasizing the need for companies to determine their AI ambitions, assess their maturity, align their strategy, and seek support from leaders in the field as they navigate this transformation in financial reporting and auditing.

(Note: IICA duly acknowledge the ownership / authorship of the report and re-publishing the same only for educational purpose of Independent Directors)

Click the icon to access the Original Report: