The impact of AI on auditing and financial reporting is at the heart of our latest global study AI in financial reporting and audit: Navigating the new era (PDF 1.3MB).
In early 2024, KPMG surveyed 1,800 business leaders across 10 countries, including 100 from Australia. Globally we found that although AI claims around 10 percent of IT budgets today, substantial investment increases are on the way – nearly half of the respondents anticipate a 25 percent rise in AI investment in 2025.
When looking deeper into AI uses across financial reporting and auditing, leadership expectations are also growing – most organisations deem AI as crucial for external audits, and highly value its automation and data analytics capabilities.
We explore some of the key insights from our report and look into the perceived benefits and risks facing organisations as they invest in this evolving technology.
Key trends: strategic investment in AI
The survey results demonstrate the importance of AI in financial reporting and auditing and highlight deliberate investment from leadership, to drive digital maturity and a more proactive approach to financial reporting.
AI in financial reporting is rapidly expanding
In three years, 99% of companies globally say they will be piloting or actively using AI in financial reporting.
Gen AI to become commonplace in auditing
Almost all global respondents expect generative AI to become commonly used in auditing. This was also reflected in Australia where 92% of respondents found Gen AI to be important for external auditing.
AI is being driven from the top
67% of companies globally already have a company-wide vision and strategy for AI, driven by the board.
Auditors are expected to lead the way
Globally, 73% of boards expect auditors to prioritise AI in anomaly and risk detection. 53% of firms want auditors to prioritise predictive analysis.
Australian businesses are keen to invest
51% of Australian respondents are spending 11-20% of their IT budget on AI, compared to 44% globally. And 75% of Australian firms are either piloting or adopting AI for financial reporting.
Australia is behind on governance
Only 48% of Australian companies have set up formal policies and governance versus 61% globally.
Whether it’s through the use of computer vision, anomaly detection or in recent times, generative AI, KPMG has been at the leading edge of responsibility developing AI solutions… and is doing so in a highly regulated market. We have also developed strategic partnerships and alliances with market-leading AI technology partners to keep us at the forefront of innovation.
Benefits and risks of using AI in financial reporting
Historically, financial reporting and auditing has the reputation of being time-consuming and error-prone, requiring statistical sampling and manual data checking. Today, AI is enabling more rigorous, accurate and timely audits, while offering predictive insights throughout the year.
Learnings from the research indicate that AI significantly reduces company costs, boosts employee productivity, and attracts talent.
The value drivers expected for financial reporting include:
- Anomaly detection (61%)
- Trend, impact and risk predictions (60%)
- Improved evidence-based decision-making (58%)
- Real-time risk, fraud and weakness insights (56%)
- Increased data accuracy and reliability (51%)
But organisations are also alert to barriers and risks, including:
- Relevant, consistent data collection (49%)
- Uncertain ROI (49%)
- Financial reporting and auditing data accuracy (46%)
- Cyber security (45%)
- Regulation compliance (44%)
AI in financial reporting and audit: Navigating the new era
Discover what leaders are saying about the use of AI in financial reporting and auditing, and how it has been successfully implemented around the globe.
How KPMG can support AI disruption in financial reporting
KPMG has established a strong mindset of innovation through our smart audit platform, KPMG Clara – designed to deliver a consistent risk-focused audit. It offers embedded digital capabilities that use data directly from client financial systems to improve client collaboration.
Our clients are also supported by deep subject matter expertise, industry knowledge and a unique strategic framework that helps design, build, deploy, and use AI solutions in a responsible and ethical manner while accelerating value.
As stewards of the capital markets, KPMG auditors understand the complex business, regulatory and technical challenges our clients face. They are in a unique position to make the most of AI and advanced technologies, transforming how we work together to deliver exceptional experiences and insights in a values-driven, human-centric and trustworthy way.
KPMG's AI in Audit specialists
If you have any questions about the research or how we can support your financial reporting transformation, please contact one of our AI in Audit specialists.
