Almost 80% of Australian institutional investors believe chief executives should be held directly responsible for a firm’s financial reporting errors, according to a survey.
Research from accounting software provider BlackLine found only 29% of investors felt that chief financial officers should be held responsible.
The research found globally, there was an increasing lack of investor confidence in companies’ financial practices and this led to a reliance on top executives for assurance to ensure that better reporting standards were applied.
Half of the Australians surveyed said they became frustrated when companies could not communicate who was ultimately responsible for signing off on financial reports, and 99% said they would be adversely impacted if a company misreported its finances.
Another 21% said a lack of visibility over how financial data was gathered, checked, or analysed made them doubt its accuracy, and 65% of investors globally said the lack of transparency was unsustainable in the longer term, particularly in unpredictable and unstable economic periods.
The current uncertainties brought on by the COVID-19 pandemic had emphasised transparency further with 97% of Australian investors agreeing that real-time visibility into finances was critical if firms wanted to stay competitive in the next 12 to 18 months.
BlackLine ANZ regional vice president, Claudia Pirko, said: “In recent months, the Australian financial services sector has had the opportunity to shine in its support for the community during the COVID-19 pandemic after the shocking findings of the Hayne Royal Commission.
“However, these survey results show that strong financial controls and real-time visibility of a company’s financials are of paramount importance to investors.
“The industry would be well served to continue to regain their trust through ongoing due diligence and oversight of the systems, processes and technologies which underpin confidence, innovation and customer delight.”
The Australian investors surveyed also believed (77%) that artificial intelligence and machine learning would lead to greater accuracy and transparency in accounting and report. Another 62% said AI-driven bots would one day be able to calculate the best investment opportunities.