The Borneo Post (Sabah)

Finance leaders rethink roles and responsibi­lities as new operating reality sets in

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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.

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Lee Pei Yin

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