Industries

Helping clients meet their business challenges begins with an in-depth understanding of the industries in which they work. That’s why KPMG LLP established its industry-driven structure. In fact, KPMG LLP was the first of the Big Four firms to organize itself along the same industry lines as clients.

How We Work

We bring together passionate problem-solvers, innovative technologies, and full-service capabilities to create opportunity with every insight.

Learn more

Careers & Culture

What is culture? Culture is how we do things around here. It is the combination of a predominant mindset, actions (both big and small) that we all commit to every day, and the underlying processes, programs and systems supporting how work gets done.

Learn more

Navigating The AI Era In Financial Reporting

Opportunities, Risks, and Investments Trends to Enhance Trust through Technology 

May 8, 2024
  • In the next three years, 100% of U.S. financial reporting leaders report they will be either piloting or using AI in financial reporting, up from 71% today.
  • As for generative AI, 97% will be either piloting or using the technology in financial reporting in three years, up from 46% today. In fact, GenAI is the most prioritized technology among U.S. financial reporting leaders in the coming year.
  • Survey finds the top five benefits of AI in financial reporting are real-time insights into risks, fraud, and control weaknesses (70%); lower costs (58%), ability to predict trends and impacts (57%), increased data accuracy and reliability (57%), and better data-enabled decisions (53%).
  • In 2023, 61% of financial reporting leaders said that it was important for auditors to utilize AI in performing their analyses; today that number is 83%. Businesses expect their auditors to conduct a more detailed review of the control environment (66%) and assess their AI governance maturity (61%).

New York, May 8, 2024 – All U.S. financial reporting leaders surveyed report they expect to be piloting or using artificial intelligence (“AI”) in financial reporting within three years, and 97% expect to be doing the same with generative AI (“GenAI”), according to a new survey released today by KPMG LLP, the U.S. audit, tax, and advisory firm.

This new survey finds U.S. businesses will continue to invest more of their IT budget in AI-related activities, with GenAI being the top priority next year. Meanwhile, financial reporting leaders are focused on navigating risks by becoming AI ready and expect their external auditor to not only use AI and GenAI in the audit, but also use professional judgement to evaluate control environments. This includes conducting third-party attestation over companies' use of AI as well as providing insights on a company’s AI governance maturity.

“It’s clear that financial reporting leaders are rapidly accelerating investments to use AI and GenAI to not just gain efficiencies but create more value for their organizations by predicting trends and identifying emerging risks," said Scott Flynn, KPMG U.S. Vice Chair - Audit. “Understanding the range of complementary investments in cloud, data, and governance is critical for both financial reporting leaders and external auditors to mitigate risks from this rapid transformation.”

The findings come from KPMG’s latest survey, published in the report AI in Financial Reporting and Audit: Navigating the New Era. The survey was conducted among 1,800 companies across ten major markets. Key perspectives and findings from 300 U.S. respondents are highlighted below. They expand upon the findings from the October 2023 U.S. survey, AI’s Role in Enhancing Trust in Financial Reporting and the Capital Markets

Key takeaways from the survey are highlighted below.

The use of AI and GenAI in financial reporting will be ubiquitous in the coming years.

FLYNN: “The potential benefits of AI are driving every conversation with financial reporting leaders. In the next year or two, the fear of missing out on AI will be replaced with just missing out.”

  • In the next three years, 100% of U.S. financial reporting leaders report they will be either piloting or using AI in financial reporting, up from 71% today.
  • As for GenAI, 97% of financial reporting leaders will be either piloting or using GenAI in financial reporting in the next three years, up from 46% today.
  • In the previous survey, 18% of leaders said they do not use AI in financial reporting with 10% specifying no specific time for rolling out AI solutions.
  • Additionally, in the survey from last year, 10% said they were “not using or considering” GenAI in financial reporting.

GenAI is the #1 technology priority for financial reporting leaders in the coming years, with companies focusing on complementary technologies today.

FLYNN: “The depth of AI and GenAI’s capabilities certainly surprised many, and it’s clear companies are focusing on investing in the technologies that will better enable the use of AI, such as cloud, data, and ERP.”

  • 19% of U.S. financial reporting leaders are going beyond planning and piloting, and using AI this year, behind cloud technology (77%), data and analytics (55%), and Enterprise Resource Planning (54%).
  • Next year, however, U.S. financial reporting leaders will be prioritizing GenAI (58%) the most among all technologies, followed by process mining technology (45%).

U.S. companies are investing more of their IT budgets on AI-related activities than other countries, on average, and those investments are expected to rise in the coming years.

“The benefits of AI compound as companies organize their data, move to the cloud, and integrate AI across processes. In that context, how companies invest over the next few years will shape competitive positioning and the role of finance functions in business strategy,” said Thomas Mackenzie, KPMG U.S. and Global Audit Chief Technology Officer.

  • On average, U.S. companies are spending 10.1% of their IT budgets on AI-related activities today, compared with 9.9% across all countries studied. U.S. companies intend to boost their overall AI budgets by 16.9% next year, and by 24.6% over the next three years.
  • Some are moving faster: 30% plan to ramp up their AI budgets by between 25% and 74% over the next three years. 

Relative to all companies, AI Leaders [1] are investing more in AI-enabling technologies and processes, taking more action to mitigate risk, and – most importantly – reporting more benefits.

FLYNN: “In the era of compound volatility, companies are navigating a multitude of risks, but the value that AI can deliver financial reporting teams demands prioritization.”

  • AI Leaders in the U.S. spend nearly 12% of IT budgets on AI-related activities today and expect to increase that investment 25% next year and nearly 28% in the next three years.
  • Boards of Directors for AI Leaders are more likely to have established mechanisms to monitor and/or measure AI impacts (71% of AI Leaders vs. 45% of other U.S. companies), met with management to understand AI activities and plans (61% vs. 48%), and set up policies and governance aligned with ESG (Environmental, Social, Governance) goals (79% vs. 69%).
  • AI Leaders are also more likely to have developed principles for using AI, ensured tech leadership is involved in systems integration discussions, piloted AI initiatives to validate ROI (Return on Investment), and more.
  • AI Leaders are more AI-ready from a technology perspective due to greater progress on implementing key enabling technologies and processes. These include cloud migration (94% of AI Leaders are at mid or full implementation vs. 72% of other U.S. companies), standardization of workflows (89% vs. 70%), establishment of common data basis or single source of truth (84% vs. 70%), and standardization of system landscape (60% vs. 48%).
  • Most importantly, compared to those just beginning to use AI, Al Leaders are far more likely to report a host of benefits from AI-enabled reporting, including enhanced staff skills due to AI assistants (42% of Leaders vs. 30% of Beginners), ability to predict trends and impacts (62% vs. 51%), and greater ability to identify data outliers and anomalies (31% vs. 21%).

The landscape is evolving as companies seek to overcome barriers, mitigate risks, and realize benefits from an AI-enabled financial reporting process.

FLYNN: "As companies engage more with AI and GenAI in financial reporting processes, new barriers and challenges are driving critical thinking on risk mitigation strategies. Education is paramount, but a more holistic approach to responsible AI use is critical to building and preserving trust.”

  • Across all U.S. companies, top benefits expected in three years include real-time insights into risks, fraud, control weaknesses (73%), increased data accuracy and reliability (67%), and lower costs (62%). In addition, 60% expect greater ability to predict trends and impacts.
  • Despite industry concerns that AI will disrupt the workforce, some believe it will act as a magnet for talent and innovation. 34% expect AI to attract talent, while 26% believe AI will help fill staff shortages. 37% believe AI assistants will enhance staff skills.
  • Financial reporting leaders indicate certain barriers identified last year may have eased.
    • Thirty-one percent of financial reporting leaders indicated ethical concerns, such as bias or misinformation is a barrier to adoption, down from 48% last year.
    • Keeping up with regulatory changes has also fallen to 41% from 49%.
    • Risks from using algorithms without human oversight fell from nearly half to 35%.
  • Meanwhile, 56% of respondents identified data security and privacy concerns as the biggest barriers to companies’ adoption of AI, compared to just 32% of respondents last year. Other barriers include limited skills and talent (46%), difficulty gathering relevant and consistent data (44%), and inadequate funding and investment levels (43%).
  • U.S. financial reporting leaders noted the most effective practices for mitigating GenAI risks include regular audits and monitoring (50%), education and training (50%), ethical frameworks (47%), and human oversight (42%). Other important actions include collaboration and regulation adherence, third-party reviews, privacy measures, and disclosures. 

 

Today, financial reporting leaders expect auditors to use AI in their audit approach and evaluate companies’ use of AI within financial reporting.

FLYNN: “AI is fundamentally transforming the audit. We expect to deliver more real-time auditing with greater insights into anomalies and trends supported by deep evaluation of the control environment governing the use of AI in financial reporting.”

  • In 2023, 61% of financial reporting leaders said that it was important for auditors to utilize AI in performing their analysis; today that number is 83%.
  • Last year, 47% said they thought that GenAI would become a common practice among auditors in one to two years, and 46% foresaw it happening in three to five years. Now, 73% of financial reporting leaders expect the use of GenAI to become the norm over the next two years, and 23% believe it will happen in two to three years.
  • Top areas that auditors should prioritize include risk/anomaly identification (65%), data analysis and quality management (65%), risk mitigation and internal controls (62%), and fraud detection (58%).
  • Financial reporting leaders’ expectations of auditors in the future are highest in two areas: 66% expect their auditors will conduct a more detailed review of the control environment (slightly up from 64% last year), and 61% expect them to assess their AI governance maturity (considerably up from 53% last year).
  • In addition, 33% expect their external auditor to provide third-party attestation over the use of AI technology. 

[1] Leaders are defined as companies in the top 25th percentile for AI readiness, based on responses to survey questions around AI adoption and governance in financial reporting. Beginners are in the bottom 25th percentile.

# # #

About KPMG LLP

KPMG LLP is the U.S. firm of the KPMG global organization of independent professional services firms providing audit, tax and advisory services. The KPMG global organization operates in 143 countries and territories and has more than 273,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

KPMG is widely recognized for being a great place to work and build a career. Our people share a sense of purpose in the work we do, and a strong commitment to community service, inclusion and diversity and eradicating childhood illiteracy. Learn more at www.kpmg.com/us.

Additional Resources

close
Contributors
close
Media contacts

Explore more

Webcast Replay Webcast Upcoming Listen Now

AI in financial reporting and audit: Navigating the new era

US survey results - Financial reporting leaders' AI expectations for their companies and external auditors.

Webcast Replay Webcast Upcoming Listen Now

KPMG Upgrades GenAI Audit Assistant, Unveiling New Capabilities To Empower Its 9,000+ Audit Partners and Professionals

Today, KPMG, LLP, the US audit, tax and advisory firm, announced upgrades to KPMG Audit Chat released in 2023, a proprietary generative AI tool built on Azure OpenAI service, and to KPMG Clara, our global smart audit platform.

Webcast Replay Webcast Upcoming Listen Now

AI's Role in Enhancing Trust in Financial Reporting & Capital Markets

AI is set to revolutionize financial reporting and audit, with many financial reporting functions adopting AI and generative AI.

Thank you!

Thank you for contacting KPMG. We will respond to you as soon as possible.

Contact KPMG

Use this form to submit general inquiries to KPMG. We will respond to you as soon as possible.

By submitting, you agree that KPMG LLP may process any personal information you provide pursuant to KPMG LLP's Privacy Statement.

An error occurred. Please contact customer support.

Job seekers

Visit our careers section or search our jobs database.

Submit RFP

Use the RFP submission form to detail the services KPMG can help assist you with.

Office locations

International hotline

You can confidentially report concerns to the KPMG International hotline

Press contacts

Do you need to speak with our Press Office? Here's how to get in touch.

Headline