Long-term value based on transparency, smart tech and new skills are set to transform corporate reporting

Singapore, 4 March 2019

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  • 61% of Singapore finance leaders (global: 58%) say that businesses are highly trusted by public
  • 80% (global: 72%) say AI will have significant impact on how finance drives data-driven insight
  • 68% (global: 49%) say they spend more time gathering and processing data than analyzing it

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 (including Singapore) 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%). In Singapore, 61% of finance leaders share similar sentiments.

Reporting nonfinancial data is gaining prominence with 80% of Singapore finance leaders (global: 72%) 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 global respondents say that nonfinancial information is not independently verified today.

Mr. Joon-Arn Chiang, EY Asia-Pacific Financial Accounting Advisory Services Leader says:
“Investors are shifting from relying on historical financial information to looking for more contemporaneous indicators of future performance. Nonfinancial information such as those that indicate alignment with significant social issues like climate sustainability and diversity play a greater role in influencing investor decisions. Having comparable and dependable nonfinancial information builds greater trust in the capital system, and enables more discerning choices. Assurance over this nonfinancial information will be key to the way finance functions evolve in the future with the infusion of technology such as artificial intelligence.”

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 68% of those surveyed in Singapore (global: 49%) say they spend more time gathering and processing data than analyzing it.

Chiang says:
“Many finance leaders are trained to be detail-oriented and seek to get as much information as available to support decision-making. However, in the current world of instant data and bite-sized information, this process of decision-making may need to change. Finance leaders should balance the need for complete information, which can take a long time to gather, and having ‘sufficient’ data to make decisions faster or better than competitors. This mindset shift will create distinct competitive advantages, and leaders who embrace this will better prepare their organizations for the future. The skill of being able to extract ‘sufficient’ insight from each organization’s data pools will be highly sought after.”

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 global 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% of global respondents citing it a top concern.

Chiang says:
“Technological advances will drive greater use of existing data, and with that, efficiency in data collection and organization. Leveraging technological solutions to assist in collecting, transforming and analyzing data will allow the finance person to move on to perform higher-value tasks. This would drive greater organizational value as well as performance efficiency.”

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, with 90% of Singapore respondents (global: 74%) saying that there is an urgent need for finance to recruit new skills.

In addition, a significant majority (Singapore and global: 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. Two-thirds (Singapore: 66%, global: 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 80% of Singapore respondents (global: 72%) identifying AI skills as the most vital.

The full report can be viewed here.

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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.