How AI is transforming auditing and financial reporting

Impact of AI on audit

The impact of AI on auditing and financial reporting is at the heart of our latest global study AI in financial reporting and audit: Navigating the new era.

In early 2024, KPMG surveyed 1,800 business leaders across 10 countries, including 100 from Australia. Globally we found that although AI claims around 10 percent of IT budgets today, substantial investment increases are on the way – nearly half of the respondents anticipate a 25 percent rise in AI investment in 2025.

When looking deeper into AI uses across financial reporting and auditing, leadership expectations are also growing – most organisations deem AI as crucial for external audits, and highly value its automation and data analytics capabilities.

We explore some of the key insights from our report and look into the perceived benefits and risks facing organisations as they invest in this evolving technology.

Whether it’s through the use of computer vision, anomaly detection or in recent times, generative AI, KPMG has been at the leading edge of responsibility developing AI solutions… and is doing so in a highly regulated market. We have also developed strategic partnerships and alliances with market-leading AI technology partners to keep us at the forefront of innovation.

Shane O'Connor

KPMG Global Audit Head of AI and KPMG Australia Partner

Key trends: strategic investment in AI

The survey results demonstrate the importance of AI in financial reporting and auditing and highlight deliberate investment from leadership, to drive digital maturity and a more proactive approach to financial reporting.

AI in financial reporting is rapidly expanding

In three years, 99% of companies globally say they will be piloting or actively using AI in financial reporting.

Auditors are expected to lead the way

Globally, 73% of boards expect auditors to prioritise AI in anomaly and risk detection. 53% of firms want auditors to prioritise predictive analysis.

Gen AI to become commonplace in auditing

Almost all global respondents expect generative AI to become commonly used in auditing. This was also reflected in Australia where 92% of respondents found Gen AI to be important for external auditing.

Australian businesses are keen to invest

51% of Australian respondents are spending 11-20% of their IT budget on AI, compared to 44% globally. And 75% of Australian firms are either piloting or adopting AI for financial reporting.

AI is being driven from the top

67% of companies globally already have a company-wide vision and strategy for AI, driven by the board.

Australia is behind on governance

Only 48% of Australian companies have set up formal policies and governance versus 61% globally.

Benefits and risks of using AI in financial reporting

Historically, financial reporting and auditing has the reputation of being time-consuming and error-prone, requiring statistical sampling and manual data checking. Today, AI is enabling more rigorous, accurate and timely audits, while offering predictive insights throughout the year.

Learnings from the research indicate that AI significantly reduces company costs, boosts employee productivity, and attracts talent.

Anomaly detection (61%)
Trend, impact and risk predictions (60%)
Improved evidence-based decision-making (58%)
Real-time risk, fraud and weakness insights (56%)
Increased data accuracy and reliability (51%)

Relevant, consistent data collection (49%)
Uncertain ROI (49%)
Financial reporting and auditing data accuracy (46%)
Cyber security (45%)
Regulation compliance (44%)

Download the report

AI in financial reporting and audit: Navigating the new era

Discover what leaders are saying about the use of AI in financial reporting and auditing, and how it has been successfully implemented around the globe.

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How KPMG can support AI disruption in financial reporting

KPMG has established a strong mindset of innovation through our smart audit platform, KPMG Clara – designed to deliver a consistent risk-focused audit. It offers embedded digital capabilities that use data directly from client financial systems to improve client collaboration.

Our clients are also supported by deep subject matter expertise, industry knowledge and a unique strategic framework that helps design, build, deploy, and use AI solutions in a responsible and ethical manner while accelerating value.