Impact of Digital Transformation on Financial Reporting and Audit Processes

Abstract

Technological advancement now occurring at a fast pace is reducing the finance sectors dynamism through the changes in the report of financial statements and auditing. As part of this research, the experiences of digitalization are analyzed with special emphasis on automation, artificial intelligence (AI), machine learning (ML), and data analysis. Sampling KPIs, audit results, and technology usage in financial processes, the study uses the dataset gathered from Kaggle. Software such as Python, Tableau, and Excel are used in performance and insightful data analysis and representation, looking into how these technological aids impact financial output. The results point out that digital transformation improves the accuracy, efficiency, and quality of financial reporting and auditors. The efficiency of data processing has been increased by 30 % through Re-automation of activities while AI based models in financial statements have minimized errors of 15 percent. Its statement revealed that through training of the analytical model known as machine learning; the accuracy of fraud has been enhanced by 25% to enhance financial strength in its decision making. However, some issues remain, for example, securing digital data from cyber threats, meeting various and constantly changing requirements, ensuring the employees’ constant training needs. The use of digital tools becomes a challenge for data security and, at the same time, problems with legacy systems and skills hamper proper implementation. In this research, the significance of digital transformation is accentuated as the key to updating financial practices and, consequently, the need to consider the difficulties it presents is underlined. Cyber security, flexibility in regulations, and the overall development of the people must all form the cornerstone of sustainable integration. The study concludes that there are major advantages, but with risks, security issues, compliance and organization development need to be also considered to get the most of digital transformation.