CFOs say technology change is their No. 1 external reporting challenge

• Singapore Chief Financial Officers (CFOs) are challenged by changing stakeholder expectations and reporting frequency
• CFOs expect shifts in reporting operating model

CFOs are left exposed as the increasing volume and pace of data impacts their ability to provide meaningful insights to boards at speed, with no errors. This finding is stated in a new report* by EY Financial Accounting and Advisory Services (FAAS): 66% of respondents worldwide say this issue is having a significant impact on the effectiveness of corporate reporting, up from 57% in 2015.

How can reporting catch up with an accelerating world?, an annual global survey of 1,000 CFOs or heads of reporting of large organisations across 25 countries (including 40 from Singapore) in organisations with revenue greater than US$500 million finds that the Americas, Asia-Pacific, Japan and the Middle East all cite changes to technology as their No. 1 external reporting challenge.

Dealing with these technological changes, including cloud-based systems, data analytics, robotic process automation (RPA) and artificial intelligence (AI) is also the top issue for 35% of emerging markets respondents.

Joon-Arn Chiang, EY Asia-Pacific FAAS Managing Partner, Ernst & Young LLP, says, “CFOs worldwide are struggling to make the most of the increased volume and speed of data available to them. Many are encumbered by legacy systems that do not allow reporting teams to extract forward-looking insight from large, fast-changing data sets. The result is an increasing expectation gap between what boards now look for from corporate reporting and what CFOs can deliver. Until reporting catches up with technological advancements it will continue to be compromised.”

Close to a third (32%) and 40% of global and Singapore respondents surveyed rank their reporting operating model as “average”, and 56% and 37% of them respectively say transforming their model is a major focus of their role.

Chiang adds, “High operating costs over more routine transactions are driving the outsourcing of high-volume work to lower-cost countries. The concentration of data prepared in a consistent manner in a centralised location, combined with the use of analytics, presents companies with the opportunity to derive insights and anticipate opportunities that were not viable previously. It also allows for faster and more specific and focused changes to the reporting function that enables organisations to respond better to evolving business and reporting demands.”

He concluded, “CFOs are mapping out how they see the future of reporting. However, unless decisive action is taken quickly to define a bold strategy and vision for advancing the reporting process, they will continue to fall behind the pace of technology.

"The future-ready CFO needs to become fluent in the tools available for them to deliver a corporate reporting strategy that integrates technology with financial and non-financial reporting needs, so as to effectively elevate their role to become true strategic business partners to the CEO.”

*How can reporting catch up with an accelerating world? surveyed 1,000 CFOs or heads of reporting of large organisations to understand the challenges they face in corporate reporting. Over More than 40% of the organisations were in excess of US$5 billion a year in revenues, with 21% in excess of US$20 billion. Respondents were split across the Americas; Asia-Pacific; Europe, Middle East, India and Africa (EMEIA); and Japan, and covered 14 main industry sectors. The survey was supplemented by in-depth interviews with the following CFOs and heads of reporting organisations, as well as EY subject-matter professionals.