Singapore’s finance leaders alarmed by flawed nonfinancial data, but AI could be the game-changer if adoption barriers are overcome

SINGAPORE: The city-state’s finance leaders are increasingly raising concerns over the reliability and integrity of nonfinancial data used for corporate reporting, according to a new report by EY featured in an article from the Singapore Business Review. The findings reveal growing difficulties in maintaining data consistency and addressing formatting issues, highlighting a significant need for improvement in digital infrastructure. With investors placing greater emphasis on accurate, transparent reporting, the adoption of innovative technologies like artificial intelligence (AI) could play a pivotal role in shaping the future of corporate disclosures.

Data inconsistencies and formatting woes – a major concern

Nearly all finance leaders in Singapore express concerns about the integrity of nonfinancial data in corporate reports, with 43% pointing to inconsistencies in the data itself and 30% identifying challenges related to data formatting. These issues are becoming increasingly problematic as the demand for accurate, reliable corporate disclosures grows. The report highlights that while companies are striving to meet these challenges, many lack the necessary tools to ensure the credibility and consistency of their data.

Artificial intelligence – the game changer for corporate reporting?

Artificial intelligence (AI) presents an exciting opportunity for improving data accuracy and boosting investor confidence in corporate reporting. In fact, 60% of Singapore’s investors believe AI could significantly enhance the credibility of reported data. Furthermore, 51% see AI as a valuable tool for detecting discrepancies and inconsistencies in reporting.

Despite this optimism, the path to AI adoption is not without its hurdles. Around 68% of finance leaders are eager to integrate AI solutions into their systems, yet 13% remain hesitant, citing concerns over the associated risks and the need for a clearer understanding of its long-term implications.

Sustainability reporting – navigating regulatory and compliance hurdles

Sustainability is also at the forefront of corporate reporting in Singapore, with investors showing optimism about the impact of new regulatory frameworks on sustainability disclosures. A significant 83% of investors believe that the evolving regulations will improve transparency in environmental, social, and governance (ESG) reporting. However, finance leaders face a dual challenge – meeting the rising compliance standards and managing the associated costs.

Approximately 64% of finance leaders cite the financial burden of compliance, while 58% acknowledge the complexity involved in adhering to these regulations. Additionally, concerns about “greenwashing” persist, with 68% of finance leaders fearing that their companies may struggle to substantiate their sustainability claims with solid data and processes.

The need for investment in technology

Despite the increased investor interest in nonfinancial data—81% of finance leaders in Singapore report a growing investor focus on such data over the past two years—a significant gap remains in the tools required to manage and analyze this data effectively. Only 43% of finance leaders feel that their organizations have the necessary technology infrastructure to handle these challenges. This signals a critical need for further investment in digital infrastructure to ensure companies can keep up with regulatory demands and evolving investor expectations.

As these challenges continue to evolve, companies will need to prioritize innovation and investment in digital solutions to stay ahead of the curve.