The Rise of Artificial Intelligence in Financial Reporting: Key Findings from KPMG International’s Global Survey
The Rise of Artificial Intelligence in Financial Reporting: A Global Survey by KPMG International
A recent global survey conducted by KPMG International has shed light on the increasing adoption of artificial intelligence (AI) in financial reporting. The AI in Financial Reporting and Audit: Navigating the New Era report reveals that 10% of companies have already widely adopted AI in their financial reporting processes, while a staggering 72% are currently piloting or using it selectively. Furthermore, it is projected that within the next three years, 99% of organizations will integrate AI into their financial reporting operations.
Drawing insights from financial reporting executives and board members across 1,800 companies in six industries and 10 countries, the survey highlights AI’s transformative potential in business models, particularly in financial reporting and auditing. Interestingly, companies in the Asia-Pacific region are lagging behind in AI adoption for financial reporting, with only 29% compared to North America (39%) and Europe (32%).
As AI continues to evolve, 64% of companies anticipate auditors conducting a more detailed review of the control environment concerning AI usage in financial reporting. Additionally, businesses are looking for auditors to prioritize predictive analysis (52%), faster delivery (47%), and real-time auditing throughout the year (45%).
Foong Mun Kong, Head of Audit at KPMG in Malaysia, emphasized the significant shift brought about by the growing adoption of AI in financial reporting. Auditors are now expected to lead the AI transformation due to their expertise in financial reporting processes and their ability to identify areas where AI can provide the most value. This shift is leading audits to become more real-time and predictive, revolutionizing how insights are delivered.
While AI adoption offers numerous benefits, including increased productivity and efficiency for financial reporting teams, it also presents challenges such as data privacy concerns, limited AI skills, and difficulties integrating with existing tools. However, these obstacles are expected to diminish as organizations become more proficient in AI usage.
KPMG’s study outlines four key approaches to achieve AI maturity, including mitigating risks, overcoming adoption barriers, implementing ethical AI practices, and ensuring AI readiness through best practices.
Foong concluded by highlighting the triple win that AI advancements in financial reporting bring to companies, auditors, and information users. The majority of companies expect auditors to evaluate their use of AI in financial reporting, providing assurance over AI governance and controls. While no jurisdiction currently requires auditors to perform assurance reviews of AI governance, Foong is confident that regulators and standard setters will align with market expectations.
The full AI in Financial Reporting and Audit report by KPMG International is available for download on their website, offering valuable insights into the future of AI in financial reporting.