AI Adoption in Financial Reporting to Reach 99% in 3 Years — KPMG Report

KPMG International’s research among 1,800 companies across 10 major global markets revealed that nearly three-quarters (72%) of businesses are already using or piloting AI in financial reporting.

The research findings published in the report "AI in financial reporting and audit: Navigating the new era" reflect that AI adoption in financial reporting is expected to reach 99% in the next three years. However, adoption varies based on geography, sector, and company size.

Geographically, North American companies lead in AI adoption (39%), followed by Europe (32%), and Asia Pacific (29%). Sector-wise, the Telecom and technology sectors are the most progressive (41%), while consumer products and retail lag behind (26%).

Further, the larger the company, the more suitable they are to be a leader in AI-enabled financial reporting. Four out of ten of the largest companies, with revenue of over $10 billion, are leaders, while less than half that percentage are leaders at companies with under $5 billion in revenue, according to the survey.

The research also highlights the impact AI has on auditing, bringing new analytical capabilities and insights. Consequently, auditors are expected to drive the AI transformation and inspire financial reporting.

Commenting on the findings, Larry Bradley, Global Head of Audit at KPMG International, says: “AI is not just hype. It is already having a profound effect on how companies operate, including their systems, processes, controls, and governance over financial reporting, and this is set to dramatically accelerate in the next few years. We are leaving the digital age and entering the AI age. As auditors, we are committed to utilizing the power of AI in everything we do, not just as a tool but as a fundamental part of our approach to auditing. Our goal is to ensure that AI is used in a way that is trustworthy, human-centric, and values-based. This is underpinned by KPMG’s Trusted AI Approach.”

The report further elaborates that companies that embraced AI have seen myriad benefits, as 65% of the leaders can predict trends and impacts, 60% can get real-time insights into risks, and 57% experienced better data-driven decision-making and increased data accuracy.

GenAI is gaining attention, with 47% of the leaders prioritizing it for financial reporting over other technologies such as data and analytics, process mining, and the cloud.

When it comes to managing risks, nearly two-thirds of respondents (64%) anticipate auditors to play a crucial role in reviewing AI use in financial reporting and ensuring a controlled environment. However, regulatory frameworks must evolve to keep pace with AI's rapid development in financial reporting and auditing.