Cyber security risks and additional financial reporting controls brought about by the global health crisis and a virtual work environment kept financial executives up at night, according to a survey by US audit, tax and advisory firm KPMG.
More than 91% of the financial executives surveyed during KPMG’s 30th Annual Accounting & Financial Reporting Symposium said that the global health crisis had an impact on their financial reporting processes. One in ten (9.8%) said they had been highly impacted, with many new processes and controls implemented, as well as changes to existing processes and controls.
“It’s no surprise that COVID-19, and the resulting changes to companies’ financial reporting and controls, were top of mind for most financial executives,” said Christian Peo, national managing partner - Audit Quality and Professional Practice at KPMG. “Just as companies have thought through and will continue to think through changes in processes and controls, auditors have had to work through changes in planning and executing our audits during the pandemic.”
COVID's impact on finance
Just over half (53%) of respondents said that disclosures around risks, management discussion and analysis, liquidity and other trends were the COVID-19 issues that required the most significant time investment. This was by far the biggest issue stemming from COVID that required significant time from the finance department, with the second biggest concern - preparation of forward-looking cash flow estimates only being identified by 14.3%.
The impact of COVID-19 on the organisation (40.74%) was the main issue aside from specific financial reporting duties that kept financial executives up at night. Regulatory mandates, which had been the leading concern last year, ranked second, with nearly 20% of respondents listing it as a top concern.
Cyber vigilance on the up
Concern around cyber security is on the up in corporate finance organisations, with around half of respondents (49.38%) stating that their concern has increased. The same percentage said that their cyber security concerns have always been high while just 1.24%, perhaps unwisely, said they are not concerned at all about cyber security.
The concern around cyber security stems from the very top of organisations, with 86% of finance execs guessing that this would be their CEO's number one risk to the business. Supply chain (10%) and terrorism (4%) trailed by a long way.
Perhaps mirroring this concern, over 79% of respondents also said that digital transformation is important or extremely important to their company.
The Accounting & Financial Reporting Symposium
The Symposium, held virtually by KPMG for the first time, drew over 400 participants from across the US and provided financial executives with insights on how to navigate the rapidly evolving business environment. Each year, the Symposium offers in-depth updates on financial accounting and reporting developments from the past year, as well as insights into what to expect in the future.
“This year’s Symposium featured a network of KPMG thought leaders who shared the latest information about going concern, discontinued operations, business combinations, environmental, social and governance issues and leadership,” said Bill Tomazin, national managing partner - Audit Operations and Execution at KPMG. “These topics are important for financial executives to consider when focusing on financial reporting ahead of the close of the calendar year.”
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