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Global financial leaders are hopeful artificial intelligence will improve the integrity and reliability of corporate reporting data, according to EY research.
Editor’s note: This story first appeared on HR Leader’s sister brand, Accounting Times.
A recent report from EY revealed a confidence crisis in corporate reporting across global finance leaders, who are hopeful AI will offer solutions.
The 2024 EY Global Corporate Reporting Survey examined the views of more than 2,000 finance leaders and 815 institutional investors worldwide on the state of corporate reporting.
The survey assessed the major challenges businesses faced in financial and non-financial reporting, the actions they were taking and the outlook for the coming years.
The report found that non-financial data produced by organisations was “not fit for purpose to support decision making” and was a major concern among global finance leaders.
The results indicated that 96 per cent of respondents were concerned about the integrity and reliability of non-financial data.
Thirty-nine per cent reported problems with data formats, and 35 per cent reported inconsistencies.
EY global and Americas strategy and markets leader Myles Corson said these were “tumultuous times” for all business leaders and that finance chiefs were no exception.
“The task of guiding an organisation through short-term volatility while keeping a firm hand on long-term growth relies in no small part on the finance function’s effective use of data to paint a clear picture of future plans and prospects,” he said.
“But it’s clear there are major worries among CFOs and the investor community around data transparency and non-financial information, which they cannot afford to ignore.”
Survey results also exposed fears over the potential impact poor data could have on important global goals.
Over 50 per cent of respondents said they were worried organisations would miss vital sustainability targets.
Only 47 per cent of finance leaders and 53 per cent of investors said they believed that most corporates were on track to achieve stated goals.
It was also found that 55 per cent of respondents harboured fears that greenwashing allegations could be levelled against companies in their various industries.
Respondents said this would highlight underlying doubts that non-financial disclosures were backed up by due diligence, data, and processes.
EY global financial accounting advisory services leader Nicolas Lecoq said finance leaders’ apprehension about meeting crucial goals reinforced the growing importance of building confidence in reporting on sustainability efforts.
“Customers, shareholders, regulators and investors increasingly hold companies to account for their environmental impact and commitment to sustainable practices,” Lecoq said.
“This means that the integrity of corporate reporting is now more critical than ever – it reflects an organisation’s dedication to sustainability goals and can directly impact the trust that investors and the wider public are willing to invest in it.”
Despite the increasing level of concern that was reflected in the survey, 43 per cent of finance leaders said they are enthusiastic about using AI in corporate reporting, and 57 per cent of investors said AI could improve it.
Corson said technology would be the way forward for finance leaders.
“While no one can pretend there’s an easy path ahead, there are certainly ways in which organisations can successfully navigate the challenges,” he said.
“Finance leaders who focus on creating sustained value and build confidence in reporting and harnessing technology to enrich data analytics can rest assured that they are heading in the right direction.”
Fifty-two per cent of investors said AI could be used to access alternative data, and 51 per cent said they believed it could help spot discrepancies in company disclosures.
While investors appeared largely confident in AI in corporate reporting, 39 per cent of finance leaders said they were apprehensive about the likely costs, and 36 per cent said they were worried about ensuring they complied with rules and regulations.
Lecoq said despite slight concerns, AI had immense potential in the corporate reporting space.
“Although AI is still in the early stages of adoption, and while it’s clear that many finance leaders are nervous about potential costs, compliance and wider possible risks, there’s no doubting its immense potential to transform data analytics and corporate reporting for the benefit of all,” he said.
