The ability of the organization to create long-term value based on transparent reporting, adoption of new smart technologies and a different approach to talent recruitment will be the foundation for corporate reporting, according to the fifth annual EY study (FAAS) - How can the digital transformation of reporting create the bridge between trust and long-term value?
But a transparent, value-based reporting that strengthens public confidence in a business and also includes non-financial data is a key challenge amid the failure of corporate ethics and other controversy.
Globally, only 58% of surveyed financial leaders say their businesses enjoy a high level of public confidence, transparency in reporting is essential to gaining trust.
At the regional level, respondents in Japan are slightly more optimistic (68%) than Americans (63%), Asia-Pacific (59%) and Europe, Middle East, India and Africa (EMEIA) (55%).
Reporting of non-financial data is gaining ground, with 72% of financial leaders stating that this information is increasingly used in investor decision-making.
In this context, financial teams must manage non-financial information with the same rigor and safety as financial information, the study highlighting that 19% of respondents say that non-financial information is not independently verified at present.
"Automation will help financial teams move to new levels of operational agility and give them the freedom to focus on a better understanding of information, while AI will capitalize on the models underlying this data, automated learning by helping to predict scenarios and improving the results. Blockchain will help build confidence by creating a secure audit trail for each transaction, "says Adrian Bunea, Associate Partner within FAAS-EY Romania.
The correctly used smart data set can provide new insights into corporate reporting
The large amount of data collected by financial teams is not fully exploited, according to the study. Organizations around the world have access to a larger set of data than ever, due to increased IT processing power, increased connectivity and high cloud storage capacity.
However, the variety and high volume of data are overwhelming for many reporting teams and 49% of those surveyed say they spend more time collecting and processing data than analyzing them.
The study identifies two priorities: exploiting new technologies in automation, AI and blockchain, and building trust in data analysis to take full advantage of intelligent technologies in the corporate reporting process.
As such, AI will be the most important technology over five years, according to 44% of respondents, followed by automated robotic processes (RPA) (32%) and blockchain-based tools (24%).
However, the risk of data management remains the most important challenge for company reporting teams, with 54% considering it the main concern.
Labor Force Transformation is essential for financial reporting
As the company reporting function adopts smart technologies and new ways of exchanging information, it will require another profile of skills and competency sets, the study found, with 79% of respondents saying there was an urgent need for financial departments to recruit professionals new sets of competencies.
High demanding skills such as AI, blockchain, and machine learning experience will be essential in generating innovation, with 72% of respondents considering AI's competences as the most important.