Two new reports from the Financial Education and Research Foundation (FERF) released this week reveal developing forces in technology and the capital markets are influencing the future of the accounting, audit and finance profession in fundamental ways.
First, the 14th Annual Public Company Audit Fee Study found that 36 percent of preparer respondents indicated they plan to incorporate the use of artificial intelligence (AI) into their financial reporting process within the next five years.
While not a majority of preparers, it is incredibly significant given that AI technology gained widespread adoption over the past year.
The second FERF study, The Sustainability Talent Gap in Finance, shows that half of the financial leaders surveyed have already hired finance professionals in full-time sustainability reporting roles.
Given the issues in the accounting pipeline and the premium placed on making the correct hiring bets in the current labor market, an emphasis on sustainability reporting in staffing the finance suite means that these newly developing skills will be part of the industry’s talent DNA for decades to come.
New Skills, New Needs
It shouldn't be a surprise that both preparers and auditors are shifting their attention to AI given their recent experience leveraging new technologies during the past few years of pandemic-driven remote work.
As the FERF report states, 89% of FEI senior leaders surveyed indicated that their auditor used emerging technologies as part of their audit processes during the most recent reporting year and that a majority (64%) felt their use resulted in improved audit quality. Separately, almost 80% of audit partners surveyed by the Center for Audit Quality – the report’s partner – indicated that they used data analytics and/or other emerging technologies as part of their most recent audit in 2022, reflecting a 5% increase over the prior year.
AI may turn out to be the most significant development in technology for accounting and auditing, with all of the Big Four audit firms announcing projects
to build AI-powered tools and solutions in the next several years.
Just as AI is taking hold of the future, developing and expanding sustainability skills is the current priority in industry accounting, according to the FERF report issued along with Persefoni.
48% of FEI members surveyed said that they plan to hire both full-time employees and external consultants over the next 12 months to address both federal and state climate reporting requirements and that 53% said they are already upskilling members of our finance function to support climate reporting.
The most critical need now is around internal controls in sustainability, with 70% of respondents saying it's the critical skills they need to fill immediately.
“Given the magnitude of the lift to translate from voluntary to mandated reporting, the level of investment in personnel is unsurprising,” one controller is quoted as saying.
You can access the reports at the links below. As always, research is free to FEI members.
14th Annual Public Company Audit Fee Study Report
The Sustainability Talent Gap In Finance