Artificial intelligence is becoming increasingly important for financial reporting: around three quarters of companies (73%) are already using or testing the technology today. In just under three years, almost all companies (99%) plan to use AI. To this end, they are investing an average of just under 10 percent of their entire IT budget in AI – and the trend is rising sharply. These are the findings of a new KPMG study, for which companies from Germany, France, the UK, Ireland, the Netherlands, Spain, the USA, Canada, Australia and Japan were surveyed worldwide.
"AI in financial reporting has now established itself as a strategic technology within companies. This development will progress rapidly, marking a transition from the digital age to the age of AI."
According to the study, companies have high hopes for the use of AI. Two thirds believe it will strengthen their ability to predict trends and possible effects on their business. 60 percent expect real-time insights into possible risks, while 57 percent anticipate better data-driven decisions and improved data accuracy.
Large and Listed Companies Implement AI Faster
In an industry comparison, telecommunications and technology companies have made the most progress in the introduction of AI: 41% of them use AI in their financial reporting, followed by representatives of the energy, natural resources and chemicals industries (35%) and healthcare and life sciences (31%). Consumer goods and retail companies lag behind at 26%. The type of company and its size also have an influence on speed. Large and listed companies are currently one step ahead of their smaller and privately owned counterparts – this is due in particular to the increased public interest in these companies.
The biggest obstacles to the introduction of AI in financial reporting cited by companies include data protection and security (59%), a lack of expertise and qualified employees (56%), insufficient funding (49%), compliance with regulations (42%) and the risk of algorithms being used without human supervision. Companies also have concerns about the accuracy of the results: 54% have “major concerns” here. “The challenges of introducing AI in financial reporting are manifold. Companies should seek specialist advice here. This starts with data management, continues with the selection of suitable cooperation partners and ends with regulatory issues,” says Sebastian Stöckle.
Auditors to Drive Transformation and Ensure Quality
When it comes to the use of AI in financial reporting, companies’ expectations of their auditors are changing. 64% of the companies surveyed expect their auditors to evaluate the use of AI by their clients and to check and certify the quality of the results. “Despite all technological progress, there are limits to the use of AI. AI is and remains a tool – and humans with their judgment, expertise and critical attitude are responsible for quality and security,” says Sebastian Stöckle.
According to the companies, auditing firms should take advantage of AI in three areas in particular: The technology should provide improved efficiency and accuracy of audits, be used more for predictive procedures and help analyze large amounts of data and gain insights that may not be apparent to human auditors. In order to meet increased client expectations, KPMG is bundling AI-based cutting-edge technologies on the global audit platform KPMG Clara.
About the Study
The study surveyed 1,800 finance professionals across six industries and ten countries to understand how AI is transforming financial reporting and auditing. Among the participants were 300 companies from Germany.
Source: KPMG, May 21, 2024
