CFOs and financial controllers of large organizations believe non-traditional skillsets would allow them to gain public trust via transparent, value-driven corporate reporting, said EY on Tuesday.
The reporting of non-financial data—important in building trust via corporate reporting—is increasingly prevalent, with 72% of finance leaders indicating that non-financial information is growingly used in investors’ decision-making, according to EY’s recent survey of more than 1,000 CFOs or financial controllers of large organizations with revenue greater than US$500 million across 25 countries.
This means that finance teams need to manage non-financial information with the same rigor and assurance as financial information, though 19% of respondents say that non-financial information is not independently verified today, EY pointed out.
“The public’s weak trust levels in business are reinforced by the disconnect between the reporting agenda of corporates and the public’s agenda,” said Peter Wollmert, EY Global and EY EMEIA FAAS (Financial Accounting and Advisory Services) Leader. “Too often, reporting fails to capture non-financial information as drivers of organizational performance, leaving investors denied an opportunity to fully understand the business’ future potential for long-term value creation and its intangible assets.”
Globally, only 58% of finance leaders surveyed say that businesses are highly trusted by the public, with transparency in reporting being a key driver to gain trust, according to survey results. The Asia Pacific percentage is similar to the global one at 59%.
Therefore, organizations must account for and explain performance much more clearly, coherently and transparently, and manage non-financial information with the same rigor and assurance as financial information, he advised.
Finance leaders find the volume of data overwhelming
While organizations have a greater amount of data than ever before that can be used for reporting, 49% of those surveyed say they spend more time gathering and processing data than analyzing it as the huge volume of data is overwhelming.
To gain more time for generating insights from the data available and to build trust, new technologies such as AI and blockchain become important.
“Automation will help finance teams to drive new levels of operational agility and give them freedom to focus on generating insights, while AI will harness underlying patters in that data with machine learning helping to predict scenarios and improve results. Blockchain will contribute to building trust by creating a secure audit trail of each and every transaction,” Wollmert said.
Survey results indicate that AI will be the most important technology in five years’ time according to 44% of respondents, followed by robotic process automation (RPA) (32%) and tools based on blockchain (24%). However, data risk remains the number one challenge facing corporate reporting teams, with 54% citing it a top concern.
AI the most vital skill
To align workforce with the deployment of new technologies, 79% of respondents indicate that there’s an urgent need to recruit new skills as the corporate reporting function adopts those technologies and new ways of sharing information.
In addition, a significant majority (76%) of respondents say there’s an urgent need to recruit talent with nontraditional backgrounds while 72% of those identify AI skills as the most vital.
While finance teams recognize the urgency of transforming the workforce, they also note the obstacles, especially when it comes to technological innovation, nearly two-thirds (63%) of finance leaders say that resistance and cultural differences within teams are barriers to digital innovation.