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Press release
29 Oct 2024
Finance chiefs turn to AI to combat crisis of confidence in corporate reporting
- Latest EY Global Corporate Reporting Survey reveals that almost all the world’s finance leaders (96%) are worried about the integrity and reliability of nonfinancial data
- More than half of investors (57%) say AI could be key to assessing credibility and accuracy of data, while 51% believe it could help spot discrepancies
Fears about the integrity and reliability of crucial corporate reporting data are weighing on the minds of finance leaders around the world, but hopes are rising that Artificial Intelligence (AI) may offer some much-needed answers, according to the 2024 EY Global Corporate Reporting Survey.
The ninth edition of the survey explores the views of more than 2,000 finance leaders and 815 institutional investors around the world on the state of corporate reporting. It assesses the major challenges businesses are facing in financial and nonfinancial reporting, the actions they are taking and the outlook for the coming years.
Among the key findings from the research is an almost universal concern amongst finance leaders that the nonfinancial data produced by their organizations is not fit for purpose to support decision-making – 96% of respondents say they worry about the integrity and reliability of this data, and many have reported problems with data formats (39%) and inconsistencies (35%).
The findings sound further alarms on corporate reporting standards as they expose fears over the impact that poor data may have on important global goals. Half of those surveyed are seriously worried that organizations will miss vital sustainability targets over the coming years – only 47% of finance leaders and 53% of investors believe that most corporates are on track to achieve stated goals.
The survey shows that the focus by stakeholders on nonfinancial drivers of value is intensifying, with more than two-thirds of finance leaders (69%) saying that they have noticed investors asking more questions about these issues than they did two years ago.
Many of those surveyed (55%) harbor fears that allegations of greenwashing could be leveled against companies in their various industries, highlighting underlying doubts that nonfinancial disclosures are backed up by the necessary due diligence, data and processes.
Investors are hopeful that new reporting standards could help businesses’ efforts to improve sustainability disclosures – 78% of respondents say they think new regulations could have a positive impact. However, finance leaders seem to have worries: more than half (55%) say they expect costs to be burdensome, and two-fifths (44%) believe that meeting the new rules would be highly complex.
Pressure on CFOs and other Finance leaders is increasing in EU and Romania with CSRD being audited starting 2024. This questions not only the quality of the disclosures but also the impact it may have on other communications to investors. The accountability the CFO inherits on non-financial reporting comes with parallel requests for efficiency in the company. One of the main challenges is the measurement of data quality in this heterogeneous area after a period of implementing data quality governance on financial data which were structured for a long time.
Guillaume Macczak
EY Romania Assurance CFO & GBS Services Partner
Hopes are high, however, that technology could provide urgently needed answers. More than half of investors (57%) believe that AI could prove very useful as a tool to assess the credibility and accuracy of financial and nonfinancial disclosures, while 52% think it could be used to assess alternative data, and 51% believe it could help to spot discrepancies in company disclosures.
Two-fifths of finance leader respondents (43%) say they are enthusiastic about using AI in corporate reporting, however, more than one-quarter (29%) say they are holding out until the risks of the technology are better understood; 39% are apprehensive about the likely costs; and 36% are worries about ensuring they comply with all the relevant rules and regulations relating to AI. Only one-third (32%) say they already have high-grade technology in place for managing and analyzing data.
About the research
The 2024 EY Global Corporate Reporting Survey — part of the CFO Imperative series — is the ninth edition of a research program that was launched in 2014. The series focuses on corporate reporting and the future of the finance function.
Between March and May 2024, FT Longitude, on behalf of the EY organization, conducted research into both companies and investors. The research canvassed more than 2,000 senior finance leaders at the companies issuing reporting, as well as 815 institutional investors as users of those disclosures and the primary group interested in material information about financial impact. The goal is to better understand where corporates and investors have shared views and where there is a disconnect.