The Borneo Post (Sabah)
Finance leaders rethink roles and responsibilities as new operating reality sets in
KUALA LUMPUR: Disruption caused by the Covid-19 pandemic and the resulting geopolitical and macroeconomic uncertainties are providing an opportunity for leading finance executives to rethink the role of their function and how corporate reporting can be structured and delivered.
This is according to the sixth annual EY Financial Accounting Advisory Services (FAAS) survey, How can corporate reporting connect your business to its true value?
The survey of more than 1,000 CFOs and financial controllers across 26 countries shows that finance leaders anticipate their function to look very different in the future, with a major shift to a smarter operating model.
Fifty-three per cent of respondents think it is likely that more than half of the finance and reporting tasks currently performed by people will be executed by artificial intelligence (AI) over the next three years. Similarly, 54 per cent think it is likely that blockchain-based systems will underpin finance.
To make the most of smart technologies in corporate reporting, however, respondents identify building trust as a key prerequisite. As such, more than two thirds (68 per cent) of responding finance leaders say that governance, controls and ethical frameworks still need to be developed and refined for AI.
Without those frameworks, finance leaders (63 per cent) are concerned about the risk implications of using AI in finance and reporting, from security threats to regulatory risk. At the same time, many respondents do not have complete trust in the output of these systems, with 47 per cent saying that the quality of the finance data produced by AI cannot be trusted in the same way as data from traditional finance systems.
Tim Gordon, EY Global Financial Accounting Advisory Services Leader, said, “The Covid19 pandemic has accelerated the transformation of finance functions and made the use of smart technologies increasingly the norm.
“The challenge for finance leaders now is to map out how finance and reporting are to be delivered in this new reality. Building trust into smart technologies can unleash a tech-powered future for finance functions, where digitally savvy people work seamlessly with smart machines to provide the forward-looking insights that stakeholders require.”
As investors and other stakeholders are looking to organisations to adopt a longerterm perspective and focus on long-term value creation, the survey shows that the majority of responding CFOs and financial controllers (72 per cent) are embracing this shift.
More than two thirds (69 per cent) of respondents say that CFOs and senior finance leaders are increasingly seen by key stakeholders as the stewards of long-term value in their organisation. Two thirds (66 per cent) of finance leaders also say that demand for forwardlooking financial analyses and forecasts has increased over the last 12-months. Respondents to the survey report that stakeholders are also looking for new insights on nonfinancial factors of corporate reporting, such as environmental, social and governance (ESG) data (55 per cent).
This increasing focus on highquality nonfinancial information is reinforced by 65 per cent of respondents, who believe there is significant value for their organization that is not measured or communicated using traditional financial KPIs, such as brand value and human capital.
Lee Pei Yin, Partner, Financial Accounting and Advisory Services, Ernst & Young PLT, added,”In Malaysia, organisations are at varying stages of adapting their business models to the new normal. The finance functions in some sectors are still responding to the unprecedented challenges of the pandemic itself, while others are already looking to plan for what's next.
“The financial reporting over the past year has provided some insights into the business and financial challenges that organisations face and the arising accounting issues.
“Clearly, organisations and their finance functions will need to prioritise strategically and reimagine what the new normal will look like for their business, people and sector.