According to the sixth EY Financial Accounting Advisory Services (FAAS) global corporate reporting survey, 79 percent of finance leaders have the data volumes to give stakeholders the insight into company culture but only 37 percent report quantifiable key performance indicators (KPIs) in this area.
The report, Does corporate reporting need a culture shock?, highlights the growth of investors’ demands for more transparency and actionable insights from company reports, at a time when the potential to use artificial intelligence (AI) and ever-growing volumes of data offer a transformation in the accountability of businesses.
Peter Wollmert, EY Global and EY EMEIA FAAS Leader, says, “Finance leaders are under no illusion that the shift in investor focus toward company culture means there is a pressing need for them to realign corporate reporting to focus more on long-term value. Eighty three percent of EY survey respondents say that a healthy corporate culture in which values or behaviors are consistently embraced is critical to building trust, and 81percent say it helps reduce risk. But despite this acknowlegement, what we see is a lack of action turning the need for these insights into reality.”
The survey based on the views of 1,000 CFOs or financial controllers of large corporations with revenue greater than USD500 million across 25 countries, showed that there is a willingness to use technology to meet the needs of greater transparency and more insight into company culture which is important. This is important when 74 percent of finance leaders surveyed say that investors are increasingly focused on nonfinancial information.
At the same time, the findings further highlight concerns about progress in building trust into data analytics and AI. Sixty percent of group CFOs say that the quality of finance data produced by AI cannot be trusted in the same way as data from existing finance systems.
Transparent, forward-looking information – based on a wider balance between financial and nonfinancial information – requires changes, not only to frameworks and practices, but also to mindset and culture. In other words, a change of attitude is required if corporate reporting is to offer stakeholders open and transparent information about value creation.
Hence, 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 full report visit https://www.ey.com/en_gl/assurance/does-corporate-reporting-need-a-culture-shock