KUALA LUMPUR: Businesses must put in place a robust approach to culture reporting to embed the critical role of culture in corporate reporting, an Ernst & Young (EY) survey said.
They also need to invest in the right talent mix to drive change and build trust and ethical algorithms into artificial intelligence that can provide the insights that investors increasingly require, according to the sixth EY Financial Accounting Advisory Services (FAAS) global corporate reporting survey released today.
The survey gathered the views of 1,000 financial controllers (CFOs) of large organisations with revenue greater than US$500 mil (US$1=RM4.1) across 25 countries.
The report said although the majority of finance leaders (79%) say they have the data volumes today to give stakeholders the insight they want into company culture, only 37% report quantifiable key performance indicators (KPIs) in this area, according to the survey.
The report entitled ‘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.
Commenting on the findings of the survey, Peter Wollmert, EY Global and EY Europe, Middle East, India and Africa leader, said: “Finance leaders are under no illusion that the shift in investor focus towards company culture means there is a pressing need for them to realign corporate reporting to focus more on long-term value.
“No longer seen as a ‘soft’ issue that has little to do with the value of their organisations, 83% of EY survey respondents say that a healthy corporate culture in which values or behaviours are consistently embraced is critical to building trust, and 81% say it helps reduce risk.
“But despite this acknowledgement, what we see is a lack of action turning the need for these insights into reality,” he said.
The survey found a willingness to use technology to meet the needs of greater transparency and more insight into company culture, while building trust into data analytics and AI.
This is particularly important when 74% of finance leaders surveyed say that investors are increasingly focused on non-financial information.
Wollmert said: “Transparent, forward-looking information – based on a wider balance between financial and non-financial 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,” he said. – Feb 19, 2020, Bernama
