Welcome to newsletter 8 of Cutting through with KSIB, our final newsletter of this financial year.  

This month we cover the following topics: 

1. Agentic AI implementations – what’s the role of the CFO? 

2. Overcoming inertia – getting started and how to manage the risk 

3. Appraise Reporting – we have developed and launched new managed service, Appraise reporting which turns your standard general ledger financials into a financial report with full disclosures, audit workpapers and Board reporting. 

A quick reminder that climate reporting is here and KSIB has a practical, hands on approach to simplifying this complexity as much as possible and now has some great use cases to share.  More information can be found at: Sustainable businesses are successful businesses | Achieve Growth Through Sustainability — KSIB

If you enjoy our insights, please forward our newsletter to your team or contacts so they can subscribe.  If you would prefer to listen to this newsletter as a short 10-15 minute podcast, please access this here: podcast. 

As always, you can feel free to email me at kristin@ksib.com.au

Regards, 

Kristin

Kristin Stubbins

CEO and Founder, KSIB

① The role of the CFO as agentic AI takes off

A great CFO is a strategic partner to the CEO, and the strategy of all modern businesses will be driven and optimized in some way by AI. The CFO should ideally be positioned as the sensible strategic adviser and driver.

In our experience, AI implementations will be successful if:

• The data and technology is optimised

• the risk issues are understood and well managed

• the people issues are managed well.

The CFO plays a unique and central role in all of these areas.

Understanding the technology and your readiness from a data and a broader organisational perspective

The CFO sits in the centre of the organisation and needs to understand the opportunities and the limitations of the technology.  How the technology will work in an organisational system is complex – the people and risk implications are significant but the opportunities are also significant. Many of the lessons we have all learned with respect to major change projects over the past 20 years are relevant. The CFO needs to play an active role in these implementations – the danger is that often the implementations are an IT led exercise, without broader organisational input. 

Managing token usage and the ROI on AI investments will be a CFO imperative. This requires strong reporting and understanding of the benefits and risks associated with broad AI usage and top-down agentic use case implementations. 

Risk management is much more than governance (but includes governance)

Managing the risks from a system perspective can mean the difference between success and failure and the CFO is the guardian of risk in most large organisations. New risks that present themselves with agentic systems include the Generative AI model risks, system design risks, heightened cyber risks and people risks. Many of the legacy controls used to mitigate risk might now be redundant so there is a significant challenge to manage transition risk.   

There are also many process improvement opportunities as legacy systems and processes are streamlined. 

People underpin the transformation

We will pick this up separately in a series focused on CPOs and people issues more broadly, but the CFO has a significant role to play in managing the strategic workforce planning. The transition issues are complex, not least keeping your people motivated when there is uncertainty (we will talk about this some more in future newsletters and podcast episodes). 

② How to get started and how best to understand the opportunities and the risks of enterprise AI implementations

The challenges outlined above are important, but enterprise AI implementations present significant opportunities and the bigger risk for Australian organisations at the moment is arguably doing nothing at all.

KSIB has recently been working with large organisations to perform an AI impact assessment identifying key focus areas and a high-level phased roadmap for implementation – often including foundational elements such as governance, controls by design and data cleaning.

We have also developed an assessment program that can apply to all agentic or significant implementations. This provides an independent view (primarily with a risk management focus) over the system or product before it goes live.

③ Our next managed service - Appraise 

AI is also a very useful tool in the development of managed services – where KSIB can help clients by managing a particular process or functional area. We launched Harp Marketing in March – an end-to-end marketing offering with Brand foundations, amplified campaign management and ROI measurement. We have now introduced Appraise, our financial reporting managed service.  I have included the following Q&A with Stephanie Nehme, the architect of Appraise. Steph was supported by Steven Brown in the development of this managed service, as it incorporates a streamlined reporting platform to automate the process of producing a statutory financial report (a key component of the offering). 

Question: What does Appraise offer? 

Answer: Appraise is a managed financial reporting service where our primary output is a set of statutory financial statements.  We use our proprietary mapping and automation software to take your general ledger and to produce the primary statements and the note disclosures for statutory reporting.  We also produce the supporting workpapers that your auditor will need and the Board reporting that allows a seamless sign off process.  This whole package is produced efficiently and is reviewed by experts, saving both time and money in the process. 

Question: Who will most benefit from Appraise? 

Answer: A broad spectrum of organisations will benefit including: 

• Mid-market companies with a CFO but a small finance team who are not experts in financial reporting 

• Organisations that have a new Corporations Act reporting obligation - large proprietary companies, foreign subsidiaries, fast-growing businesses that have crossed a reporting threshold

• Group structures where consolidation or special purpose vehicles add real complexity and there are numbers of sets of statutory accounts to prepare 

• Organisations where the auditors keep raising reporting issues and where fees are increasing 

Question: What have you learned through the architecture and platform build process? 

Answer:  Financial reporting is complex, but it doesn't have to feel that way if it’s managed by the right people. Our job is to absorb the complexity, so clients don't have to.  "The right people" means audit fluency - knowing what auditors look for and what boards need, built in from the start.  We have learned that there is no equivalent managed service in the Australian market and more finance functions are struggling with the complexity and the cost (in terms of finance team time and audit fees and overruns) than we expected.