KUALA LUMPUR: Ninety-nine per cent of organisations will adopt artificial intelligence (AI) into their financial reporting processes in three years, according to a global survey by KPMG International. 

The survey revealed that 10 per cent of companies have widely adopted AI in financial reporting, while 72 per cent are piloting or using it selectively. 

The report, AI in Financial Reporting and Audit: Navigating the New Era,  drew insights from financial reporting executives and board members across 1,800 companies in six industries and 10 countries. 

It explored the progress of AI adoption in finance functions, its impact on internal finance teams, and companies' expectations for external auditors. 

Notably, companies in the Asia-Pacific region have recorded the slowest pace of AI adoption in financial reporting (29 per cent) compared to North America (39 per cent) and Europe (32 per cent).

As AI development gains pace, the survey discovered that 64 per cent of companies expect auditors to conduct a more detailed review of the control environment in relation to their use of AI in financial reporting.

It added that 52 per cent of businesses want their auditors to prioritise predictive analysis. Additionally, 47 per cent desire faster speed of delivery, and 45 per cent seek real-time auditing throughout the year.

"The growing adoption of AI in financial reporting signifies a transformative shift beyond mere technological advancements. 

"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," said KPMG Malaysia head of audit, Foong Mun Kong. 

The survey found that the use of AI translates into greater productivity for the financial reporting team, combined with higher talent acquisition and skill development. 

Currently, over four out of 10 companies have already reported greater employee productivity and efficiency, and this figure is expected to rise to six out of 10 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).

AI adoption also came with major challenges during the early stages, including data privacy concerns, limited AI skills and talents, poor organisational knowledge of AI, uncertainty about best use cases to prioritise, and difficulties with integrating with existing tools.

"However, these hurdles diminish to some extent as organisations become more proficient in using AI," noted the report. 

Foong added 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. 

"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," added Foong.

https://www.nst.com.my/business/corporate/2024/07/1078003/almost-all-companies-will-use-ai-financial-reporting-3-years-kpmg