Accountants need to respond to investor demands for more transparency and actionable insights from company reports, but have doubts about the potential for artificial intelligence (AI) to help with this analysis, research by EY has found
The firm’s survey was based on the views of 1,000 CFOs or financial controllers of large organisations with revenue greater than $500m (£381m) across 25 countries.
Three quarters (79%) of finance leaders said investors wanted more insight into corporate culture and 74% said investors use nonfinancial information in their decision-making, indicating that culture and trust have become critical priorities that will shape future corporate reports.
However, although the majority of finance leaders (79%) said they have the data volumes today to give stakeholders the insight they want into company culture, only 37% report quantifiable key performance indicators (KPIs) in this area.
Peter Wollmert, EY Global and EY EMEIA financial accounting advisory services (FAAS) leader, said: ‘Finance leaders are under no illusion that the shift in investor focus toward company culture means there is a pressing need for them to realign corporate reporting to focus more on long-term value.
‘No longer seen as a “soft” issue that has little to do with the value of their organisations, 83% of EY survey respondents say that a healthy corporate culture in which values or behaviours are consistently embraced is critical to building trust, and 81% say it helps reduce risk.
‘But despite this acknowledgement, what we see is a lack of action turning the need for these insights into reality.’
The survey findings showed concerns remain about progress in building trust into data analytics and AI. Over half (60%) of group CFOs said that the quality of finance data produced by AI cannot be trusted in the same way as data from existing finance systems.
The top risks cited in relation to turning nonfinancial data into reporting information were maintaining data privacy (33%); data security (29%); and the lack of either robust data management systems (21%) or controls (17%) for nonfinancial information.
Wollmert said: ‘Transparent, forward-looking information – based on a wider balance between financial and nonfinancial information – requires changes, not only to frameworks and practices, but also to mindset and culture.
‘In other words, a change of attitude is required if corporate reporting is to offer stakeholders open and transparent information about value creation.’