- 79% of finance leaders say investors want more insight into corporate culture
- 74% say investors use nonfinancial information in their decision-making
- 60% say the quality of finance data produced by AI cannot be trusted as much as data from usual finance systems
Although the majority of finance leaders (79%) say 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, according to the sixth EY Financial Accounting Advisory Services (FAAS) global corporate reporting survey.
The report, Does corporate reporting need a culture shock?, highlights the growth of investors’ demands for more transparency and actionable insights from company reports, at a time when the potential to use artificial intelligence (AI) and ever-growing volumes of data offer a transformation in the accountability of businesses.
Peter Wollmert, EY Global and EY EMEIA FAAS Leader, says:
“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 organizations, 83% of EY survey respondents say that a healthy corporate culture in which values or behaviors are consistently embraced is critical to building trust, and 81% say it helps reduce risk. But despite this acknowlegement, what we see is a lack of action turning the need for these insights into reality.”
The survey, which gathered the views of 1,000 CFOs or financial controllers of large organizations with revenue greater than US$500m across 25 countries, found a willingness to use technology to meet the needs of greater transparency and more insight into company culture. This is particularly important when 74% of finance leaders surveyed say that investors are increasingly focused on nonfinancial information. At the same time, the findings further highlight concerns about progress in building trust into data analytics and AI. Sixty percent of group CFOs say 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 are: maintaining data privacy (33%), data security (29%), and the lack of either robust data management systems (21%) or controls (17%) for nonfinancial information.
Wollmert says: “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.”
To embed the critical role of culture in corporate reporting, the report advises businesses to put in place a robust approach to culture reporting, invest in the right talent mix to drive change and build trust and ethical algorithms into AI that can provide the insights that investors increasingly require.
The full report can be viewed here.
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About the survey
Does corporate reporting need a culture shock? 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 half of respondents’ organizations – 55% – have revenues in excess of US$5b a year, with 10% in excess of US$20b. 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.