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Digital Transformation

Digital Transformation

How advanced technologies are impacting financial reporting and auditing

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Foreword

The world is in the midst of a digital transformation that is changing the ways we work and live. Hundreds of millions of data points are shared every minute on the worldwide web alone, and billions upon billions more are shared within and between organizations around the globe. Yet 81% of CEOs believe that their organizations are not keeping up with the emergence of technologies that could help them make more informed decisions and run their businesses better.1

To learn how “must-have” advanced technologies are impacting financial reporting and external audit, KPMG, in collaboration with Forbes Insights, conducted a survey of CFOs, controllers and other financial executives in April 2017. We were specifically interested in knowing how organizations are dealing with the digital revolution and their plans for moving forward.

We found that virtually all (99%) of organizations believe that advanced technology can enhance external audit and 89% are using the cloud for financial reporting. However, we also found that many organizations have a long way to go, with only 26% saying advanced technologies are a “must-have” within the next one to two years.

This report, “Digital Transformation: How Advanced Technologies Are Impacting Financial Reporting and Auditing,” details the key findings from this research and also includes commentary from senior executives who are experiencing these changes firsthand. As you review this report, you will learn what is top-of-mind with financial executives today and how they plan to leverage “must-have” advanced new technologies in the future.

We hope you find this report informative and thought-provoking.

1. https://www.forbes.com/forbesinsights/kpmg_ceo_global_2016/index.html

Introduction

The explosion of data and unprecedented advances in computer processing power have dramatically increased the capacity to support decision making across multiple operations. The world has moved well beyond basic and
enhanced process automation and is entering an era of cognitive automation.

Some are calling this the “Fourth Industrial Revolution.” The impact of advanced technologies touches virtually every industry and organization on many levels, from strategic planning and marketing to supply chain management and customer service. Financial reporting and external audit are no exceptions.

As Isabel Witte, vice president and controller of Siemens Healthcare Diagnostics North America, puts it: “Technology is becoming more and more important to financial reporting and audit. But it is really much bigger than that. Beyond financial reporting, technology is an enhancement for identifying market trends,
process improvement and other metrics that help us run our business and serve our customers better.”

To learn more about the role of technology in financial reporting, Forbes Insights and KPMG surveyed 261 senior financial executives. We found that regardless of industry, organization size or geographic location, advanced technology is playing an increasing role in corporate financial reporting and external audit.

Although some organizations are moving at a faster pace than others, the vast majority agree that enhancing their technological capabilities in the financial function is a priority now and in the future. Twenty-six percent say that advanced technologies will be a “must have” capability for their organization in the next one to two years, and 55% say advanced technology will be a “must have” in three to five years. Given the speed of technological advancements, the latter may need to reconsider their sense of urgency on this issue.

This report analyzes areas in which organizations excel in adopting advanced technologies and where there is still room for improvement. It also examines challenges organizations face in introducing new technologies and maintaining data security in a cloud-based world.

Key findings

69% of respondents rate their organization's use of new technologies as "advanced;" however, given how few organizations use technologies like robotics (38%) and natural language processing (35%), there is a clear disconnect between how companies self-assess and what their companies are doing in reality

77% of executives say their finance team is using predictive analytics and 75% are using workflow automation

36% cite increased data reliability, predictability and accuracy as the main benefits of advanced technology

89% report using the cloud for financial reporting

36% report they are concerned about unauthorized use of data

53% of executives say advanced technology will be a "must-have" for their organization in three to five years

99% of executives believe advanced technology can enhance the external audit

For more information, download the full report below.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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