75 Percent of Australian Companies Already Using AI in Financial Reporting

The logo of the ChatGPT application on a laptop screen (R) and the letters AI on a smartphone screen in Frankfurt am Main, western Germany, on Nov. 23, 2023. Kirill Kudryavtsev/AFP via Getty Images

An international study has revealed that three-quarters of Australian companies are using or piloting artificial intelligence (AI) in their financial reporting, with forecasts about significant increases in AI investment in the coming years.

This figure was higher than the global average and ranked third among the surveyed countries, just behind Canada and the UK.

Released by professional services firm KPMG, the study surveyed 1,800 company leaders in 10 countries (including 100 leaders in Australia) to understand AI trends among public companies.

KPMG predicted that the adoption rate of AI by Australian companies in financial reporting would rise to 100 percent in the next three years.

At present, “traditional” AI or rule-based AI, which uses pre-programmed rules and algorithms to perform specific tasks, is the most valued technology by Australian firms in preparing financial reports, followed by robotic process automation, machine learning, and deep learning.

However, KPMG forecasted that the use of generative AI (such as ChatGPT), which can produce text, images, videos, or other data using generative models, would explode and overtake other technologies in the forthcoming period.

While only 9 percent of Australian companies are currently using generative AI, 52 percent of the surveyed leaders said it would be their top priority of all technologies in financial reporting by 2027.

In addition, there was an upward trend in spending on AI among Australian companies.

Over half of the respondents (51 percent) said they currently earmarked 10-20 percent of their IT budget for AI, greater than the global average of 44 percent.

However, 29 percent believed their AI spending would surge by up to a half, and 9 percent expected a jump of over 50 percent in the next 12 months.

“Our research shows that globally, companies are making significant investments in AI, with Australia at the forefront. This is particularly noticeable in sectors such as Telecommunications, Technology, and Finance, where AI investments are being made to enhance productivity, cut costs, improve customer experiences, and develop new products and services,” said KPMG Global Audit Head of AI and partner Shane O’Connor.

“Generative AI is now being prioritised for use in financial reporting, enabling companies to identify anomalies in financial data, generate customised financial reports, assess the efficacy of internal controls, pinpoint inefficiencies in core processes, and benchmark disclosures across their organisations.”

Concerns About AI Usage

While Australian firms are pushing for greater adoption of AI in financial reporting, there were concerns about the risks associated with the technology.

Around 31 percent of the leaders surveyed were significantly concerned about copyright in AI in general. However, the figure rose to 40 percent for those adopting generative AI.

Similarly, the percentage of Australian data organisations and management concerned about copyright rose from 33 percent to 43 percent with generative AI.

And for data sovereignty, this concern nearly doubled from 21 percent to 40 percent.

Open AI's newly released text-to-video "Sora" tool is advertised on their website on a monitor in Washington, DC, on Feb. 16, 2024. Drew Angerer/AFP via Getty Images

Mr. O’Connor said the implementation of AI in financial reporting came with a set of risks that companies needed to deal with.

“When not effectively designed, AI systems may prove to be inconsistent or even infuse bias into the evaluative process,” he said.

“The phenomenon of AI hallucinations is a reality, necessitating continual supervision of algorithms to maintain their long-term trustworthiness, while risks related to data privacy and security amplify when external entities are integrated into AI systems.

“Organisations must keep abreast of and adhere to the ever-changing regulatory landscape.”

The KPMG head of AI also stated that for organisations embracing the new technology to succeed, they need to implement robust AI governance.

“It is crucial to establish strategic supervision over the ethical and safe creation and application of AI systems,” he said.

The KPMG’s study comes shortly after a government survey indicated that 78 percent of Australians distrust articles written by AI, and 95 percent believe news outlets should disclose when AI was used in articles.