The majority of Canadian organizations have incorporated artificial intelligence into their finance functions, ahead of their global counterparts, according to KPMG’s AI in Finance survey.
Eighty-two percent of Canadian survey respondents have either applied or are trialling AI in finance, compared to 71 percent of international respondents. Sixty-nine percent of Canadian respondents reported that AI’s return on investment matches or exceeds expectations – eight percentage points more than the global average.
“Canadian organizations are increasingly weaving AI into the DNA of their finance functions because they want better data-enabled decision making, the ability to more accurately predict trends, and increased data accuracy and reliability,” said Chris Moore, partner and national leader of finance transformation at KPMG Canada, in a statement.
Canadian companies typically incorporate AI into accounting, financial planning, tax and treasury management functions. Sixty-three percent of Canadian organizations use AI in tax operations – nearly double their global peers (34 percent).
Of these Canadian companies, 46 percent are still in the pilot stage.
“Fewer than one in five organizations have adopted AI in the tax function, and many have yet to make the leap from experimenting to actively using AI for day-to-day tax processes. Complex tax regulations, a lack of up-to-date data, onerous legacy systems, and the reliance on human judgment for many tax-related decisions are still barriers to implementing AI in the tax function for many organizations,” said Susie Cooke, national tax transformation leader at KPMG Canada, in a statement.
Cooke explained that many organizations hedge on AI because of the possible risks or do not know where to begin.
“But if organizations align AI to their business strategy, establish a strong data governance foundation, and educate and upskill their talent, they can actively remove the barriers to AI adoption,” Cooke said.
Maturity phases
Under a framework, KPMG categorized organizations that use AI in finance into three maturity groups: leaders, implementers and beginners. Twenty-five percent of Canadian respondents were considered leaders, 60 percent were implementers, and 15 percent were beginners.
The “leaders” invested more in AI and used it more. They also implemented robust governance and controls and earmarked more resources for AI. Leaders invested 13 percent of their information technology budgets in enterprise-wide AI activities, while non-leaders allocated only 7 percent.
Moreover, leaders have been more proactive in handling AI-related concerns, which has led to them clearing common AI adoption obstacles like data security, skill and talent limitations, and obtaining relevant and consistent data.
“Many AI leaders have a central team within finance, or specialized AI groups within each department of finance, and that's helped those organizations address challenges such as data, security, privacy and skills gaps more effectively,” Moore said. “Canadian organizations that build and leverage their own internal resources will be better positioned to drive AI innovation in finance, and that will ultimately help drive innovation across the enterprise as well.”
Eighty-eight percent of leaders apply AI to a moderate or large degree, and leaders report an average of six active-use cases for AI.
Responsible AI use
Fifty-three percent of respondents indicated they expect auditors to review their control environments to facilitate responsible AI use in financial reporting. Meanwhile, 47 percent want auditors to assess the maturity of their AI governance, and 41 percent want auditors to conduct a third-party attestation to their AI technology use.
“AI's potential to drive real-time auditing will help companies manage their risks more proactively throughout the year. As companies advance their AI adoption, there is growing desire for auditors to help companies ensure that their use of AI is robust, safe and compliant with rules and regulations, yet few standards exist,” said Bryant Ramdoo, partner and audit innovation leader at KPMG Canada. “To best support the growing needs of Canadian organizations and investors will require all parties in the reporting ecosystem – auditors, organizations, standard setters, regulators and educators – to work together to manage the associated risks of AI and advance the future of assurance and attestation with confidence.”
Moore noted that Canadian firms are “leading the way in tapping the power of AI to improve returns in their finance functions – and this is only just scratching the surface.”
“We're still in the early stages, and there's considerable runway for organizations to implement AI in a way that impacts the entire enterprise in an even more meaningful way,” Moore said. “Canadian organizations are realizing the value AI can bring to their finance function, but embedding it deeper cross core operations, processes and workflows will further improve the quality of financial reporting, which ultimately enhances public trust.”
KPMG International conducted the AI in Finance survey with 2,900 organizations in 23 countries from April 2024 to September 2024. One hundred of the respondents were Canadian; they comprised chief financial officers, chief accounting officers, chief audit executives, chief technology officers, chief digital officers and heads of accounting or audit.