• 95% of finance leaders in India find corporate culture and trust have become critical priorities that will shape future corporate reports : EY Survey
• 80% respondents say investors use non financial information in their decision-making
• 95% respondents indicate governance, controls and ethical frameworks still need to be developed and refined for Artificial Intelligence (AI)
The organizations’ focus on transparency agenda of culture and trust have become critical priorities that are set to shape future corporate reports, according to the sixth EY Financial Accounting Advisory Services (FAAS) global corporate reporting survey, Does corporate reporting need a culture shock?
The survey gathered the views of 1,000 CFOs or financial controllers of large organizations globally with 40 respondents from India to understand the challenges they face in corporate reporting. This research shows that providing transparent financial and nonfinancial reporting (environmental, social, employee and ethical matters) is critical to the continued relevance of corporate reporting on many levels, from meeting the demands of investors to telling the organization’s value-creation story and supporting long-term value creation.
The survey also indicates two priorities: first, putting in place the advanced tools to gather and analyze large amounts of data; and second, building trust into advanced systems, including artificial intelligence for building trust in data analytics and Artificial Intelligence (AI).
Sandip Khetan, National Leader and Partner, Financial Accounting Advisory Services (FAAS), EY India says, Driving culture transformation in finance is imperative to presenting a forward-looking corporate reporting based on a wider balance between financial and non financial information. 95% of survey respondents from India say that healthy corporate culture is critical to building trust. This is key to decision making for present and potential investors.
The report highlights growth of investors’ demands for more transparency and actionable insights from company reports. In India, 98% respondents (globally – 79%) say investors want more insight into corporate culture; and 80% of finance leaders (globally – 74%) surveyed say that investors increasingly consider nonfinancial information in their decision making and for supporting long-term value creation.
With both financial and nonfinancial information key to transparency, nonfinancial data should be as credible and trusted as financial data. However, finance leaders face several challenges in building a trusted approach to nonfinancial data. 95% respondents (globally – 75%) indicate governance, controls and ethical frameworks still need to be developed and refined for AI. 85% of finance leaders in India (globally – 65%) say they have concerns about the risks using AI in finance and reporting, from security threats to regulatory risk.
The findings further highlight concerns about progress in building trust into data analytics and AI. 60% of group CFOs globally say that the quality of finance data produced by AI cannot be trusted in the same way as data from existing finance systems. The top risks cited in relation to turning non financial data into reporting information are: maintaining data privacy (33%), data security (29%), and the lack of either robust data management systems (21%) or controls (17%) for non financial information.
To embed the critical role of culture in corporate reporting, the report advises businesses to put in place a robust approach to culture reporting, invest in the right talent mix to drive change and build trust and ethical algorithms into AI that can provide the insights that investors increasingly require.
The complete report can be viewed here.
