Emerging Technologies in Transformations Drive the Need for Evolving Internal Controls

NEW YORK, Sept. 27, 2023 /PRNewswire/ -- C-suite and other executives see artificial intelligence (AI) — which includes generative AI and machine learning — as the emerging technology that poses both the top risk (44.7%) and the top opportunity (35.9%) for their organizations' internal controls environments in the year ahead, according to a recent Deloitte poll. Yet, despite rapid advancements in organizations' corporate use, only 36.4% of polled executives say that their organizations update internal controls more frequently than annually.

"As emerging technologies like generative AI accelerate, organizational internal controls need to keep pace and evolve accordingly – often through more frequent updates that involve more cross-functional teams to help ensure risk management programs are appropriately robust," said Charmaine Wilson, a Deloitte Risk & Financial Advisory principal focused on controls innovation, Deloitte & Touche LLP. "Risk management, internal audit and assurance leaders should team closely with IT leaders to continuously hone their internal controls to demonstrate to management, the board and other key stakeholders that emerging risks are being anticipated and monitored."

Over half of executives say their organizations do not have a dedicated chief controls officer in-place to help manage internal controls risks (59.5%). That said, 7.5% of that group say their organizations plan to hire a controls leader inside the next 12 months.

"As AI use advances and regulations for its use proliferate, there's a pressing need for many organizations to appoint a leader who can apply an internal controls lens to help ensure that risk management approaches can scale over time as well as during strategic initiatives like M&A activity, new IT system implementations and other business-transforming efforts," said Casey Kacirek, a Deloitte Risk & Financial Advisory managing director focused on trustworthy AI use in internal controls, Deloitte & Touche LLP. "Appointing a leader to oversee internal controls for emerging tech use can help streamline taxonomies for technology management, minimize duplicate spending, allocate resources properly, maximize tech investment returns and ultimately demonstrate longer-term organizational commitment to areas including trustworthy use of AI."

Looking beyond emerging technologies' impacts on internal controls, respondents also noted a number of challenges to their organizations' internal controls during transformations. Top transformation-driven internal controls challenges that respondents noted include a shortage of appropriately skilled staff to effectively implement internal controls in line with transformation objectives (22.2%), inconsistent or absent reviews of internal controls alongside transformation efforts (23.1%), and inability to effectively leverage transformation efforts to modernize and automate internal controls (24%).

About the online poll
Over 1,890 C-suite and other executives were polled during a recent Deloitte Center for Controllership webcast, titled "Assurance by Design: Finance transformation controls readiness," on May 25, 2023. Answer rates differed by question.

About Deloitte
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world's most admired brands, including nearly 90% of the Fortune 500® and more than 7,000 private companies. Our people come together for the greater good and work across the industry sectors that drive and shape today's marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthier society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Building on more than 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte's approximately 457,000 people worldwide connect for impact at www.deloitte.com.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.

SOURCE Deloitte