Use of AI in Financial reporting and Auditing on the rise

• Almost three quarters of companies already use AI in financial reporting
• In three years, almost all companies plan to use AI for financial reporting
• Companies are concerned about the accuracy of results and data protection  
• Auditors should ensure secure use of the technology 

Artificial intelligence is becoming increasingly important for financial reporting: around three quarters of companies (73 per cent) are already using or testing the technology today. In just under three years, almost all companies (99 per cent) are planning to use AI. To this end, they are investing an average of just under 10 per cent of their entire IT budget in AI - and the trend is rising sharply. These are the findings of a new KPMG study, for which companies from Germany, France, the UK, Ireland, the Netherlands, Spain, the USA, Canada, Australia and Japan were surveyed worldwide. 

According to the study, companies have high hopes for the use of AI. Two thirds believe it will strengthen their ability to predict trends and possible effects on their business. 60 per cent hope to gain insight into potential risks in real time, while 57 per cent expect better data-based decisions and greater data accuracy. 

In an industry comparison, telecommunications and technology companies have made the most progress in the introduction of AI: 41 per cent of them use AI in their financial reporting, followed by representatives of the energy, natural resources and chemicals industries (35 per cent) and healthcare and life sciences (31 per cent). Bringing up the rear are consumer goods and retail companies (26 per cent). The type and size of the company also have an influence on the speed. Large and listed companies are currently one step ahead of their smaller and privately owned counterparts - this is due in particular to the increased public interest in these companies.   

The biggest hurdles to introducing AI in financial reporting cited by companies include data protection and security (59 per cent), lack of expertise and qualified staff (56 per cent), insufficient funding (49 per cent), regulatory compliance (42 per cent) and the risk of algorithms being used without human supervision. Companies also have concerns about the accuracy of the results: 54 per cent have ‘major concerns’ here. ‘The challenges of introducing AI in financial reporting are manifold. Companies should seek expert advice here. This begins with data management, continues with the selection of suitable cooperation partners and ends with regulatory issues,’ says Sebastian Stöckle. 

When it comes to the use of AI in financial reporting, companies' expectations of their auditors are changing. 64 per cent of the companies surveyed expect their auditors to evaluate the use of AI by their clients and to check and certify the quality of the results. ‘Despite all the technological progress, there are limits to the use of AI. AI is and remains a tool - and humans with their judgement, expertise and critical attitude are responsible for quality and security,’ says Sebastian Stöckle.

If the companies have their way, auditing firms should utilise the advantages of AI in three areas in particular: The technology should ensure improved efficiency and accuracy of audits, be used more for predictive procedures and help to analyse large amounts of data and gain insights that may not be apparent to human auditors. In order to meet increased client expectations, KPMG is bundling AI-based cutting-edge technologies on the global audit platform ‘KPMG Clara’.

For the study, 1,800 financial experts from six sectors and ten countries were asked how AI is changing financial reporting and auditing. The participants included 300 companies from Germany.

Clemens Reisbeck

Deputy Head Corporate Communications
KPMG AG Wirtschaftsprüfungsgesellschaft

T +49 89 9282 1722
creisbeck@kpmg.com