Featured Post from Emory University, Goizueta Business School

#Expert Research: The Use of AI in Financial Reporting

May 21, 2025

5 min

Artificial intelligence (AI) is developing into an amazing tool to help humans across multiple fields, including medicine and research, and much of that work is happening at Emory University’s Goizueta Business School.

Financial reporting and auditing are both areas where AI can have a significant impact as companies and audit firms are rapidly adopting the use of such technology. But are financial managers willing to rely on the results of AI-generated information? In the context of audit adjustments, it depends on whether their company uses AI as well.

Willing to Rely on AI?

Cassandra Estep, assistant professor of accounting at Goizueta Business School, and her co-authors have a forthcoming study looking at financial managers’ perceptions of the use of AI, both within their companies and by their auditors. Research had already been done on how financial auditors react to using AI for evaluating complex financial reporting. That got Estep and her co-authors thinking there’s more to the story.

“A big, important part of the financial reporting and auditing process is the managers within the companies being audited. We were interested in thinking about how they react to the use of AI by their auditors,” Estep says. “But then we also started thinking about what companies are investing in AI as well. That joint influence of the use of AI, both within the companies and by the auditors that are auditing the financials of those companies, is where it all started.”

The Methodology

Estep and her co-authors conducted a survey and experiment with senior-level financial managers with titles like CEO, CFO, or Controller – the people responsible for making financial reporting decisions within companies. The survey included questions to understand how companies are using AI. It also included open-ended questions designed to identify key themes about financial managers’ perceptions of AI use by their companies and their auditors.

In the experiment, participants completed a hypothetical case in which they were asked about their willingness to record a downward adjustment to the fair value of a patent proposed by their auditors. The scenarios varied across randomly assigned conditions as to whether the auditor did or not did not use AI in coming up with the proposed valuation and adjustment, and whether their company did or did not use AI in generating their estimated value of the patent. When both the auditor and the company used AI, participants were willing to record a larger adjustment amount, i.e., decrease the value of the patent more. The authors find that these results are driven by increased perceptions of accuracy.

It’s not necessarily a comfort thing, but a signal from the company that this is an acceptable way to do things, and it actually caused them to perceive the auditors’ information as more accurate and of higher quality.

Cassandra Estep, assistant professor of accounting

“Essentially, they viewed the auditors’ recommendation for adjusting the numbers to be more accurate and of higher quality, and so they were more willing to accept the audit adjustment,” Estep says.

Making Financial Reporting More Efficient

Financial reporting is a critical process in any business. Companies and investors need timely and accurate information to make important decisions. With the added element of AI, financial reporting processes can include more external data.

We touched on the idea that these tools can hopefully process a lot more information and data. For example, we’ve seen auditors and managers talk about using outside information.

Cassandra Estep

“Auditors might be able to use customer reviews and feedback as one of the inputs to deciding how much warranty expense the company should be estimating. And is that amount reasonable? The idea is that if customers are complaining, there could be some problem with the products.”

Adding data to analytical processes, when done by humans alone, adds a significant amount of time to the calculations. Research from the European Spreadsheets Risks Interest Group says that more than 90% of all financial spreadsheets contain at least one error. Some forms of AI can process hundreds of thousands of calculations overnight, typically with fewer errors. In short, it can be more efficient.

Efficiency was brought up a lot in our survey, the idea that things could be done faster with AI.

Cassandra Estep

“We also asked the managers about their perspective on the audit side, and they did hope that audit fees would go down, because auditors would be able to do things more quickly and efficiently as well,” Estep says. “But the flip side of that is that using AI could also raise more questions and more issues that have to be investigated. There’s also the potential for more work.”

The Fear of Being Replaced

The fear of being replaced is a more or less universal worry for anyone whose industry is beginning to adopt the use of AI in some form. While the respondents in Estep’s survey looked forward to more efficient and effective handling of complex financial reporting by AI, they also emphasized the need to keep the human element involved in any decisions made using AI.

What we were slightly surprised about was the positive reactions that the managers had in our survey. While some thought the use of AI was inevitable, there’s this idea that it can make things better.

Cassandra Estep

“But there’s still a little bit of trepidation,” Estep says. “One of the key themes that came up was yes, we need to use these tools. We should take advantage of them to improve the quality and the efficiency with which we do things. But we also need to keep that human element. At the end of the day, humans need to be responsible. Humans need to be making the decisions.”

A Positive Outlook

The benefits of AI were clear to the survey participants. They recognized it as a positive trend, whether or not it was currently used in their financial reporting. If they weren’t regularly using AI, they expected to be using it soon.

I think one of the most interesting things to us about this paper is this idea that AI can be embraced. Companies and auditors are still somewhat in their infancy of figuring out how to use it, but big investments are being made.

Cassandra Estep

“And then, again, there’s the fact that our experiment also shows a situation where managers were willing to accept the auditors’ proposed adjustments. This arguably goes against their incentives as management to keep the numbers more positive or optimistic,” Estep continues. “The auditors are serving that role of helping managers provide more reliable financial information, and that can be viewed as a positive outcome.”

“There’s still some hesitation. We’re still figuring out these tools. We see examples all the time of where AI has messed up, or put together false information. But I think the positive sentiment across our survey participants, and then also the results of our experiment, reinforce the idea that AI can be a good thing and that it can be embraced. Even in a setting like financial reporting and auditing, where there can be fear of job replacement, the focus on the human-technology interaction can hopefully lead to improved situations.”

Cassandra Estep, is an assistant professor of accounting at Goizueta Business School, and a co-author of the forthcoming study looking at financial managers’ perceptions of the use of AI. She's available to speak about this important topic - simply click on her icon now to arrange an interview today.

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Cassandra Estep

Associate Professor of Accounting

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Anyone born in the 70’s or earlier will probably remember it well. Time was when playing any kind of video game meant physically disporting yourself to the local arcade—a twilight zone of flashing neon, electronic beeps and bops, and the clink of quarters hitting the slot. As technology advanced, the videogame came to you. Home consoles and TV stations rigged with joysticks duly became the mainstay of gaming. The Atari 2600 brought the arcade experience into dens all over the US; Pac-Man, Space Invaders, and Asteroids now at the fingertips of a generation of games who no longer needed to leave home to play. Fast forward to the era of smart phones and hi-tech, and gaming has evolved again. Today, Fortnite, Minecraft, and The Legend of Zelda can accompany you pretty much anywhere—onto a train or a bus, into the canteen at work or school, or under the covers at 2am. In our always-on, on-demand world, video gaming increasingly meets players where they are; a play-anywhere, digital user experience that empowers individuals to engage with their game of choice wherever they are, whenever it suits, and via whatever platform they prefer, desktop or mobile. For users, the benefits seem clear. But what about game producers? As availability expands to new channels and platforms, how does it change user behavior? Does it deepen engagement or does cross-platform continuity simply end up redistributing play—the addition of each new platform shifting players away from, and effectively cannibalizing, existing channels? It’s a conundrum, and not just for video game producers. Retailers, bankers, insurance firms, media, and hospitality providers—anyone with an online-first approach looking to meet their customers wherever they are—should also be cognizant of the potential downsides of channel expansion in the digital space. Weighing in here is research by Professor of Marketing and expert in the intersection of sports and cultural analytics and marketing Michael Lewis. Together with Wooyong Jo of Purdue, Lewis looks at the impact of omni-channel strategy on videogames—a proxy, he says, for other sectors and industries. What they find is critical for marketers and decision-makers in any context or business setting. Increasing the digital touchpoints between your product and customers does impact behavior—but the net results are overwhelmingly positive. Video game players play more, they spend more frequently, and they integrate gameplay more deeply into their everyday lives. In other words, the investment pays off. And the dividends in customer engagement are serious. Switching to the Switch To unpack all of this, Lewis and Jo partnered with a large US video game publisher to analyze player-level behavioral data for one its major titles in the Multiplayer Online Battle Arena, or MOBA genre. Players form teams and compete to destroy opposing team’s bases, selecting a character from a set of 100+ options. Revenue for the publisher comes from a “freemium” business model—users can make voluntary purchases to unlock new characters or buy cosmetic enhancements. These purchases are geared toward enhancing the gaming experience but don’t affect competitive outcomes, making them a critical measure of engagement. In 2019, the game was released for the Nintendo Switch, which can be docked in home consoles but is most commonly used as a mobile, hand-held device. PC players were given the option to download this new version and continue gameplay seamlessly using their existing accounts. Analyzing player behavior before and after the adoption of the new Switch platform, Lewis and Jo were able to zoom in on some critical measures of user engagement including game usage or the total number of matches played, in-game spending—what, when and how much players spent—and player inactivity or churn. “We were able to really get into player behavior over time, and what happens when you introduce the Switch option and remove the constraints of having to play in one place—the home or gaming PC,” says Lewis. “What happens when you make it possible for players to access the game they love while they’re commuting or on their lunchbreak?” Plenty, it turns out. Mobile access: gameplay, spending and churn Crunching the data, Lewis and Jo find that mobile access dramatically increases gameplay. Players who adopted the Switch version played approximately 31% more games than before—a dramatic uptick that underscores how flexibility gains translate into new opportunities to play and engage. And that’s not all. Lewis and Jo also find that gameplay becomes less concentrated within narrow windows—after school or work, say—and is now more spread out across the day, the result of the “ubiquity effect,” says Lewis. “Take away the constraints of having to be in a fixed location and you see players adding additional play sessions. Interestingly though, we don’t find any adverse effect on PC gaming. Players are simply playing more, and playing longer, rather than replacing PC time.” Then there’s in-game purchasing. MOBA-type games typically give players the option to voluntarily buy modifications for characters, known as “skins.” These skins are cosmetic enhancements: new armor, costumes, skill animations or effects. Crucially, these kinds of purchases don’t advance players to new levels of success in the game. Instead, they are used for personalization—to demonstrate status or to celebrate an in-game event. Lewis and Jo find that mobile adopters make more frequent in-game purchases. While the overall total doesn’t increase materially, these players are spending small amounts, more often—almost 7% more frequently than before. This makes intuitive sense, says Lewis. If players are logging in more often, they have more opportunities to feel inspired to want to spend on skins. But there’s another factor that may be at work. “With this kind of in-game purchasing, it’s likely that a lot of it is about credibility. When you buy a skin or a character pack, it’s like you have more aura within the game; you want to signal something to other players and let yourself be known. And this is more than just monetary, it’s about a deeper kind of engagement,” says Lewis. “It’s possible that as mobile access makes the game more of a frequent companion, as the rate of play increases, there’s this effect that players fall deeper into the community—their engagement deepens even more.” Interestingly, the shift to mobile access had the most significant impact precisely on those players whose pre-Switch in-game purchasing was lowest. These users, who were arguably most likely to disengage and drift away from the game, became significantly more active once the hand-held option became available. “If you have players spending less and less inside the game, the intuition is that these are the customers you are most at risk of losing,” says Lewis. “Bringing in the Switch has seen these customers—those more prone to churn—actively reengage with the game, maybe because they have greater propensity for the mobile version.” Either way, this should be a particularly interesting finding for marketers, he adds; retaining existing users is typically cheaper than attracting new ones. “The evidence suggests that mobile access can serve not only as a growth strategy, but also a defensive one if it helps keep marginal users engaged; those who might otherwise have detached from the product altogether.” Help Them Switch So far, so encouraging. There is one potential downside to porting a game or online product to a new channel, however, and that is usability. Lewis and Jo find that players who switched between platforms experience a slight, initial decline in in-game performance—likely because of differences in the control systems between devices. Players who’ve been using keyboard and mouse controls may need time to adapt to hand-held controllers. To mitigate this, he and Jo suggest that producers could offer tutorials or introductory gameplay modes that accelerate the learning curve as users adjust to the new interface. In most cases, usability should be factored in as an additional, hidden cost, when developers and organizations are contemplating investing in more online customer touchpoints. “Expanding your online channels will always have some cost. Taking a game from one platform and porting it to another one isn’t free, so you will want to anticipate the hurdles, even as you weigh up the clear benefits,” says Lewis. “The key is to make sure you protect your users. With things like video games, you want to think about how to guide or upskill your players, maybe have them play bots at first to ramp up their capabilities. Whenever you create a new channel that has a different operating system from the user’s perspective, you’re probably going to want to provide some aid to your fan community.” The benefits of omni-channel access should always be weighted against the costs involved, counsels Lewis. Even so, today’s competitive pressures—the seemingly inexorable march of technological innovation and evolving user expectations—are likely to make platform expansion unavoidable for most online businesses. In the world of video gaming, as major franchises release new products across multiple platforms, and player preferences become more sophisticated, companies may simply have to adopt similar strategies to remain competitive. “As everyone else invests in the same new technologies, you almost have to do the same—just as a matter of doing business,” says Lewis. “If you are launching a video game, you’ve got to compete with whatever Call of Duty or Grand Theft Auto are doing. You can’t just tell your players they can only engage on one platform. The competition is continuously raising the stakes just in terms of the bare minimum.” Building Fandom: the Connective Cultural Tissue More broadly, Lewis and Jo’s findings speak to how human beings form communities of shared passion around business entities and, perhaps more compellingly, around cultural phenomena: video games, for sure, but also sports teams, music, films, comic books, fashion, and more. Understanding the mechanisms that drive and deepen engagement sheds more light on what Lewis calls the “connective cultural tissue of fandom: ”the powerful social bonds, camaraderie, and shared identity that connect people to cultural entities and to each other. Fandom, he argues, is the “key to our world.” Understanding fan behavior is critical to understanding how it is that games, brands, sporting teams, or politics forge communities built on shared passion. “Whatever your organization or business is, you are going to be interested in driving passion. You want people to engage and love what you do. What we’re looking at in this study is a building block towards understanding how cultural entities fit into consumers’ lives, and how eliminating barriers helps to expand communities and drive relationships—extending reach and engagement by weaving cultural experiences more deeply into everyday life.” The real challenge in front of organizations, be they video game producers or online retailers, says Lewis, is to give their product the kind of “cultural meaning” that creates fans—and not just users. “When you think about the behavior of fans, the level of passion and engagement that exists around cultural phenomena—whatever they are from video games to FIFA, the English Football League to the Super Bowl, Taylor Swift to the Republican Party—that’s where you see the passion that really drives the world. And that to me, is critical in understanding how business works, how societies function, and how our world evolves.”

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