Asia-Pacific region has recorded the slowest pace of artificial intelligence (AI) adoption in financial reporting, KPMG said in a global survey Wednesday.
According to the firm’s “AI in financial reporting and audit: Navigating the new era report”, only 29 percent of companies in Asia-Pacific adopted AI in financial reporting, as compared to 39 percent in North American and 32 percent in Europe.
Overall, 10 percent of companies have widely adopted artificial intelligence (AI) in financial reporting, while nearly three-quarters (72 percent) are piloting or using it selectively.
In three years, 99 percent of organizations will be adopting AI into their financial reporting processes.
As AI development gains pace, the survey discovered that 64 percent of companies expect auditors to conduct a more detailed review of the control environment in relation to their use of AI in financial reporting.
The survey further found that more than half (52 percent) of businesses want their auditors to prioritize predictive analysis.
Additionally, 47 percent desire faster speed of delivery, and 45 percent seek real-time auditing throughout the year.
“The growing adoption of AI in financial reporting signifies a transformative shift beyond mere technological advancements,” said Foong Mun Kong, Head of Audit at KPMG in Malaysia.
“The roles of auditors are being redefined as businesses are looking to their auditors to lead the AI transformation due to their deep understanding of financial reporting processes and their abilities to pinpoint areas where AI can add most value,
“As a result, audits are shifting towards being more real-time and predictive, significantly transforming how insights are delivered,” he added.
It is noted that as AI is set to expand widely and quickly over the near future, this enables a wide range of benefits in financial reporting.
For starters, the survey found that use of AI translates into greater productivity for the financial reporting team, combined with higher talent acquisition and skills development.
Currently, over four out of ten companies already reported greater employee productivity and efficiency, and this figure is expected to rise to six out of ten within three years.
In addition, early adopters of AI in financial reporting report enjoying more benefits than other companies.
These include the ability to predict trends and impacts (65 percent), real-time insights into risks (60 percent), better data-enabled decisions and increased data accuracy (both 57 percent).
According to the survey, AI adoption also came with major challenges during the early stages, including data privacy concerns (59 percent), limited AI skills and talents (56 percent), poor organizational knowledge of AI (51 percent), uncertainty about best use cases to prioritize (41 percent) and difficulties with integrating with existing tools (38 percent).
However, these hurdles diminish to some extent as organizations become more proficient in using AI, said the survey.
“AI advancements in financial reporting represent a triple win for companies, auditors, and information users by enhancing quality, boosting efficiency, and supporting more informed business decision-making,” said Foong.
According to him, the survey uncovered that a majority of companies expect auditors to evaluate their use of AI in financial reporting, providing assurance over AI governance and controls.
“At present, no jurisdiction, including Malaysia, explicitly requires auditors to perform assurance reviews of AI governance,
“However, I am confident that regulators and standard setters will keep pace with market expectations,” he concluded.
The survey is drawing insights from financial reporting executives and board members across 1,800 companies in six industries and 10 countries.
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