- Just 58% of finance leaders say that businesses are highly trusted by public
- 72% say AI will have significant impact on how finance drives data-driven insight
- 76% say finance should recruit talent with nontraditional backgrounds
The organizational ability to create long-term value based on reporting transparency, embracing smart technologies and innovative approaches to talent are set to take center stage in the future of corporate reporting, according to the latest findings of the EY Financial Accounting and Advisory Services (FAAS) fifth annual survey, How can the digital transformation of reporting build the bridge between trust and long-term value?
More than 1,000 CFOs or financial controllers of large organizations with revenue greater than US$500m across 25 countries participated in the annual global survey. It found that transparent value-driven reporting, which will increase the public trust in the business and includes the nonfinancial data, is a key challenge amid failings of corporate ethics and other controversies.
Globally, only 58% of finance leaders surveyed say that businesses are highly trusted by the public, with transparency in reporting being a key driver to gain trust. Regionally, respondents in Japan are slightly more bullish (68%) than their counterparts in the Americas (63%), Asia-Pacific (59%) and Europe, the Middle East, India and Africa (EMEIA) (55%).
Reporting nonfinancial data is gaining prominence with 72% of finance leaders indicating that nonfinancial information is being increasingly used in investors’ decision-making. This means that finance teams need to manage nonfinancial information with the same rigor and assurance as financial information, with the survey highlighting that 19% of respondents say that nonfinancial information is not independently verified today.
Peter Wollmert, EY Global and EY EMEIA FAAS Leader, says:
“The public’s weak trust levels in business are reinforced by the disconnect between the reporting agenda of corporates and the public’s agenda. Too often, reporting fails to capture nonfinancial information as drivers of organizational performance, leaving investors denied an opportunity to fully understand the business’ future potential for long-term value creation and its intangible assets. Therefore, organizations must account for and explain performance much more clearly, coherently and transparently, and manage nonfinancial information with the same rigor and assurance as financial information.”
Smart data set to provide new insights to corporate reporting if deployed correctly
The vast amount of data collected by finance teams is not being utilized to its full advantage, according to the survey. Organizations across the world have a greater amount of data than ever before due to increases in computer processing power, growing connectivity, cloud and great storage capacity. However, the large variety and volume of data is overwhelming many reporting teams and 49% of those surveyed say they spend more time gathering and processing data than analyzing it.
The survey identifies two priorities — exploiting rapid technological advances in automation, artificial intelligence (AI) and blockchain, and building trust into data analytics — to make the most of the smart technologies in corporate reporting. As such, AI will be the most important technology in five years’ time according to 44% of respondents, followed by robotic process automation (RPA) (32%) and tools based on blockchain (24%). However, data risk remains the number one challenge facing corporate reporting teams, with 54% citing it a top concern.
Wollmert says: “Automation will help finance teams to drive new levels of operational agility and give them freedom to focus on generating insights, while AI will harness underlying patters in that data with machine learning helping to predict scenarios and improve results. Blockchain will contribute to building trust by creating a secure audit trail of each and every transaction.”
Transforming the workforce is key for finance reporting
As the corporate reporting function adopts smart technology and new ways of sharing information, it will require a different talent profile and skillsets the survey finds, with 79% of respondents saying that there is an urgent need for finance to recruit new skills. In addition, a significant majority (76%) of respondents say there is an urgent need to recruit talent with nontraditional backgrounds. And while finance teams recognize the urgency of transforming the workforce, they also note the obstacles, especially when it comes to technological innovation, nearly two-thirds (63%) of finance leaders say that resistance and cultural differences within teams are barriers to digital innovation. The survey identifies priorities for corporate reporting teams to address the workforce challenges – hire creatively and use an innovative approach to recruiting. Skills in high demand, such as experience in AI, blockchain and machine learning, will be critical in driving innovation forward, with the 72% of respondents identifying AI skills as the most vital.
The full report can be viewed here.
Notes to Editors
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.
About the survey
How can the digital transformation of reporting build the bridge between trust and long-term value? surveyed 1,000 CFOs or financial controllers of large organizations to understand the challenges they face in corporate reporting. The research was conducted by Longitude on behalf of EY Global Financial Accounting Advisory Services (FAAS). More than a third of respondents’ organizations – 35% – have revenues in excess of US$5b a year, with 12% in excess of US$10b. Respondents were split across the Americas; Asia-Pacific; Europe, Middle East, India and Africa (EMEIA); and Japan, and covered 13 main industry sectors. The survey was supplemented by in-depth interviews with CFOs and heads of reporting organizations, as well as EY subject-matter professionals.