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 (Singapore 97%, global 96%) are worried about the integrity and reliability of nonfinancial data

• More than half of investors (Singapore 60%, global 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 (including 80 finance leaders and 40 institutional investors from Singapore) 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 among finance leaders that the nonfinancial data produced by their organizations is not fit for purpose to support decision-making – 97% of the surveyed finance leaders in Singapore (global 96%) say they worry about the integrity and reliability of this data, and many have reported problems with data formats (Singapore 30%, global 39%) and inconsistencies (Singapore 43%, global 35%).  

The findings raise additional concerns on corporate reporting standards, as they expose fears over the impact that poor data may have on important global goals. At least a third of those surveyed are extremely worried that organizations will miss vital sustainability targets over the coming years, while 65% of surveyed finance leaders in Singapore (global 47%) and 53% of investors (Singapore and global) 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 growing, with the majority of finance leaders (Singapore 81%, global 69%) saying that they have noticed investors asking more questions about these issues than they did two years ago.

Many of those surveyed (Singapore 68%, global 55%) are fearful 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 – 83% of investor respondents in Singapore (global 78%) say they think new regulations could have a positive impact. However, finance leaders seem to have worries: 64% of surveyed finance leaders in Singapore (global 55%) say they expect costs to be burdensome, and 58% (global 44%) believe that meeting the new rules would be highly complex.  

Ronald Wong, EY Asean and Singapore Financial Accounting Advisory Services Leader, says:  
“Data is the heart of corporate reporting. Hence, it is understandable that stakeholders are concerned about the quality and value of the reporting. We are beginning to see finance leaders taking the initiative to drive quality and reliability of reporting by enhancing due diligence over processes and data and ensuring there is robust data lineage within the organization.”

Hopes are high, however, that technology could provide urgently needed answers. More than half of surveyed investors (Singapore 60%, global 57%) believe that AI could prove very useful as a tool to assess the credibility and accuracy of financial and nonfinancial disclosures, while 50% of surveyed investors in Singapore (global 52%) think it could be used to assess alternative data, and 48% (global 51%) believe it could help to spot discrepancies in company disclosures.  

Two-thirds (68%) of finance leader respondents in Singapore (global 43%) say they are enthusiastic about using AI in corporate reporting, while 13% of the respondents in Singapore (global 29%) say they are holding out until the risks of the technology are better understood. Just under half (Singapore 43%, global 39%) are apprehensive about the likely costs; and a third (Singapore 35%, global 36%) are worried about ensuring they comply with all the relevant rules and regulations relating to AI. Less than half (Singapore 43%, global 32%) say they already have high-grade technology in place for managing and analyzing data. 

Wong adds:  
“Just like robotic process automation years ago, we see immense interest and enthusiasm in AI adoption when it first emerged. If history has taught us anything, it’s that there is no stopping technology from advancing and we should embrace it. However, as corporates owe a duty of care to stakeholders, it is important to understand the risks and ensure there is governance ringfenced around its adoption. In the meantime, it is important to note how AI is progressing, observe how technology vendors incorporate it in their solutions, explore use cases, and assess how it can be leveraged and integrated into finance operations and technology ecosystems to fully harness its capabilities.”

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