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AI Ends Board-CFO Excuse Carousels

Jan 06, 2025 - forbes.com
The article highlights the significant impact of late SEC filings on company reputation, value, and capital access, emphasizing that such delays are more than just regulatory concerns. In 2024, there was a notable increase in missed earnings deadlines, with the SEC imposing substantial fines on major companies for tardy disclosures. Filing delays often indicate deeper management issues, such as lack of preparedness for AI-era demands, and can lead to severe consequences like bankruptcy or criminal probes. The article stresses the importance of addressing underlying management challenges, including entrenched incentives, indifference, and incompetence, to leverage AI effectively in financial reporting.

The article also discusses the hesitance among CFOs to adopt AI in financial reporting, citing data integrity risks, cost concerns, and traditional workplace cultures as barriers. It suggests a three-step process for boards to enhance AI readiness, focusing on data accessibility, report agility, compliance needs, and workflow optimization. The article provides a set of questions for boards to assess their finance teams' AI readiness and emphasizes the need for proactive AI adoption to prevent filing delays and maintain strategic focus. Ultimately, it calls for strong governance to overcome compliance misses and align incentives for effective AI integration in finance functions.

Key takeaways:

  • Late SEC filings indicate management disarray and can harm a company's reputation, value, and capital access.
  • AI can help streamline SEC reporting and reduce the risk of late filings, but boards must address underlying management challenges.
  • Only a small percentage of CFOs currently use AI in financial reporting, with barriers including data integrity risks and cost concerns.
  • Boards should assess their finance team's AI readiness by asking specific questions about AI tools and their impact on financial processes.
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