“With the extreme increase in levels of uncertainty that we have seen this year, there’s suddenly been major demands on finding the information you need to really understand what’s happening. “Clearly, organizations and their finance functions will need to prioritize strategically and reimagine what the new normal will look like for their business, people and sector. It is important to explore opportunities to operate differently in the future, leveraging data and technology to build agility and flexibility to ensure future-fitness and the ability to create long-term value in a post-pandemic world,” said Lee Pei Yin, Ernst & Young PLT partner, financial accounting and advisory services.
“This is in terms of how our business is affected in terms of the numbers and how we can undertake multiple scenario analysis. Of course, it has to be done immediately and demand is also coming from multiple sources: investors, management leaders across the business, and also regulators,” said SKF, a Swedish-based manufacturer, chief financial officer (CFO) Niclas Rosenlew in the report. “Now, demand for non-financial information, including ESG and sustainability reporting, is growing, as investors seek insight into the impact of social and environmental issues on business models.
The research also pointed out that over the recent years, CFOs have had to contend with a wave of regulatory-driven changes to financial reporting requirements, investing significant time and effort into meeting new accounting standards. “This increasing focus by investors on high-quality non-financial information is reinforced by the research, where 65% of respondents said there ‘is significant value for our organization that is not measured or communicated using traditional financial KPIs, such as brand value and human capital’,” it said.
“Senior leadership, such as CEOs, are likely to expect increased visibility and the development of advanced dashboards that provide dynamic analyses of financial performance, operating performance and changing market conditions,” it said. EY added that while demand may have accelerated as a result of the Covid-19 pandemic, it is unlikely to decline once the crisis is over.
“Finance should look to play a central role in instilling discipline into non-financial reporting processes and controls to build confidence and trust. Establishing effective governance practices — and seeking independent assurance over non-financial processes, controls and data outputs — will likely help to build trust and transparency with stakeholders. Moving forward, EY said the success of non-financial reporting is likely to depend on how relevant it is to stakeholders, how trusted and credible it is.
It found that 53% 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% think it is likely that blockchain-based systems will underpin finance. 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. “CFOs and financial controllers — whose teams have extensive experience in establishing processes, controls, and assurance of financial information — can bring their financial leading practices and experience to bear on sustainability and ESG reporting,” it said.
News Highlights Business
- 66% of respondents to the EY study say the demand for ‘forward-looking financial analysis and forecasting’ has increased over the past year
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