AI is revolutionizing financial reporting globally, with nearly universal adoption expected in the next three years, according to a recent analysis by KPMG. The research, titled AI in financial reporting and audit: Navigating the new era, surveyed 1,800 companies across six industries in ten major markets to gauge the progress of AI adoption in financial reporting and its impact on internal finance teams and external auditors.
Alan Yau, Audit Innovation Leader at KPMG China, highlighted the significant momentum AI adoption is gaining in Greater China. The use of AI is becoming universally applicable to both auditors and clients, leading to increased productivity for financial reporting teams and the enhancement of talent acquisition and skills development.
The analysis revealed that North American companies are leading the way in AI adoption for financial reporting, with 39% of companies in the region selectively or widely adopting AI, followed by Europe (32%) and Asia Pacific (29%). Among sectors, telecoms and technology businesses are making the most progress, with 41% indicating selective or wide adoption of AI, followed by energy, natural resources, and chemicals (35%). On the other hand, consumer products and retail businesses trail behind at 26%.
Companies are strategically investing in AI, with it now accounting for 10% of the IT budget and expected to rise significantly. Boards of surveyed companies have taken strategic action regarding AI, and expectations for external auditors include conducting more detailed reviews of the control environment and providing third-party attestation over the use of AI technology.
Generative AI, a relative newcomer in technology, is set to accelerate significantly over the next three years. Companies are prioritizing genAI for financial reporting more than any other technology, ahead of data & analytics, process mining, and cloud.
Businesses are mindful of the risks associated with AI, particularly focusing on data security, privacy, and ethical concerns. Managing these risks and adopting an ethical approach to AI implementation is crucial for successful adoption.
In conclusion, the symbiotic relationship between AI and human professionals is revolutionizing financial reporting, enhancing decision-making, and delivering unparalleled value to companies and stakeholders. As businesses continue to recognize the potential of AI, the future of financial reporting looks set to be shaped by innovative technologies and strategic investments.
