Despite GenAI鈥檚 rapid advancement, however, chief financial officers (CFOs) think there is room to do even more. According to a of 100 CFOs, 70% say AI and GenAI are the most crucial technologies to support the finance function’s strategic decision-making. This portends significant investment in GenAI technologies throughout the tax, audit & accounting function, which means for corporate tax professionals, their daily work lives are starting to change dramatically.

鈥淲e need to understand that this is not only just groundbreaking technology, but this will also change the way we work and do business, lending itself to a culture shift in our industry,鈥� explains Gregory Homen, Tax Partner and Tax AI Transformation Program Lead at KPMG US. 鈥淚t鈥檚 leading to tax departments having to retrain and reschool its workforce for different attributes 鈥� and is redefining what a tax professional or CPA is expected to do and how they will be performing work in the future.鈥�

Inverting the pyramid

The tax world is currently in a state of flux, brought on by a host of international regulations and reform such as Pillar Two, the potential for significant US tax changes ushered in by the new Trump administration, and more. Even with this massive upheaval, Homen says GenAI still remains one of the number one topic his clients want to discuss.

In fact, he explains, this time of disruption and change may create more of an impetus for tax departments to adopt GenAI 鈥� and faster. 鈥淎ll of the uncertainty forces the need to accelerate the understanding of information. It was an aligning of the stars, if you will, when this technology entered the public domain with force in late 2022, becoming more mainstream.鈥�

We need to understand that this is not only just groundbreaking technology, but this will also change the way we work and do business, lending itself to a culture shift in our industry.

He compares tax professionals鈥� daily tasks to a pyramid, in which the majority of a tax professional鈥檚 daily work consists of repeatable, automatable tasks. This creates the base of the pyramid. The middle of the pyramid consists of data orchestration 鈥� entering, classifying, and ultimately cleaning tax data. And the remaining smaller portion of the work at the top is where the true value lies 鈥� applying tax professionals鈥� expertise to create and exercise value-added activities. Particularly in times of change, Homen explains, 鈥渋t’s hard to add value when you’re trying to wrap your arms around the current state 鈥� GenAI is allowing us to automate a lot of those more time-consuming tasks.鈥�

In fact, GenAI may flip this pyramid on its head, Homen adds. 鈥淭hat routine task can now be automated. Even with GenAI, tax departments will still require a human-in-the-loop review of the data and information. That said, the introduction of GenAI is affording us more time and energy to look at the value-add attributes 鈥� for example, how we can take a law, digest it, and understand more quickly how it impacts a company and its tax position and future strategies.鈥�

Indeed, when asked about the top ways they expect GenAI to impact the finance function, more than half of CFOs in the KPMG survey cited improved decision-making with predictive analytics (56%) and the ability to analyze large amounts of financial data in a short period of time (51%). A number also cited being able to automate tasks to reduce manual errors (37%) and streamline operations and processes (32%).

Deriving value from GenAI in tax

But even with those benefits coming to the fore, GenAI adoption is still far from universal. Homen explains that there are common fears around GenAI implementation that have to be overcome in order to derive real value from the technology. CFO respondents to the KPMG survey pointed to a number of potential barriers to GenAI adoption, including fears of data security breaches (69% of respondents), compliance and regulatory risks (52%), and accuracy and reliability of financial information (45%). And there is another major barrier that could prevent GenAI from implementation: data governance.

The output of a GenAI tool is only going to be as worthwhile as the data feeding the model and how well data systems can interface with one another. Even for advanced tax departments, Homen notes that next step is ensuring that enterprise data is not only organized but has the ability to be shared from one system to another, specifically noting the need for an interface with GenAI.

These small victories as not just efficiency gains but are driving value by allowing tax departments to stand out among other business functions through their proper and responsible use of company data.

This can be a large lift for many time-strapped departments, to be sure. But getting to this end goal can begin with small steps 鈥� even simply ensuring that data and documents are saved within proper systems rather than on an individual鈥檚 desktop. Homen describes these small victories as not just efficiency gains, but as driving value by allowing tax departments to stand out among other business functions through their proper and responsible use of company data.

鈥淟arge language models exist for everybody, right?鈥� he says. 鈥淭he competitive advantage lies in having access to the right one and infusing accurate data into these models.鈥� So ultimately, the models can offer insight into your data and ultimately allow you to make better and more informed data-driven decisions

Yet, many corporate tax departments are not yet at this point. GenAI鈥檚 implementation in the tax, audit & accounting world still has a lot of untapped potential, but if indications from CFOs in the KPMG survey are correct, the finance world at large and the tax industry by extension will be receiving a lot of GenAI interest and investment in the immediate future.

Then, it will be on tax professionals themselves to take that interest and turn it into true and lasting value.

You can learn more about the challenges tax professionals face with technology & innovation here

At the recent 成人VR视频 Institute鈥檚 23rd Annual Law Firm COO & CFO Forum, one panel took up this and other related queries, eventually painting a picture of a legal market and a law firm business model that may look very different in a few years from what it鈥檚 like now.

鈥淚 think AI will have an impact beyond what we even can imagine yet,鈥� said one panelist, adding that even considering these questions raises others that legal professionals will have to deal with in the years to come. For example, the panelist said, it鈥檚 obvious that GenAI potentially can save lawyers lots of time in work hours, but exactly which work will be impacted? Indeed, once you get past the low-hanging fruit of tedious, clearly automatable tasks, then what?

Further, the panelist explained, it鈥檚 common sense that freed-up work time then can be used to allow lawyers to perform more value-added tasks, but exactly what are those tasks and 鈥� more importantly 鈥� how do law firms convey that value to their clients, especially in a way that will allow firms to continue increasing their billing rates?

鈥淚f we say that AI is not replacing anyone, but it鈥檚 just making them more efficient, again, we have to be able to explain that clients who may be looking at firms鈥� new-found efficiency as a way to pay them less for their fewer hours of work time,鈥� the panelist added.

Beyond this hefty conundrum, the panel looked at other areas where they see AI having the largest impact on law firms and their clients.

Practical uses of AI 鈥� Law firms and other industries currently are looking for the practical uses of AI and asking how they can best protect their clients from the mistakes that AI use could bring. As one panelist explained, AI鈥檚 best uses are in three areas 鈥� finding things, creating things, and analyzing things 鈥� and none of these strictly require the use of client data.

鈥淚f we say that AI is not replacing anyone, but it鈥檚 just making them more efficient, again, we have to be able to explain that clients who may be looking at firms鈥� new-found efficiency as a way to pay them less for their fewer hours of work time.鈥�

For example, some members of the panel and the attending audience cited current uses of AI within their firms, such as conflict tracking, tracking patent applications, time capture via a time entry generator, and even drafting terms from a raft of contracts to create a state of the industry template.

Talent management 鈥� Many on the panel suggested that law firms will have to bring in non-lawyer tech specialists and find possible ways to compensate them that do not run afoul of Rule 5.4 of the Model Rules of Professional Conduct, which effectively disallows non-lawyers from sharing in the profits of a law firm.

Indeed, one panelist suggested that might be impossible, leading to a re-thinking of that rule. 鈥淚 predict that some firm is going to finally just break this rule, saying we鈥檙e bringing in a tech professional and paying them in a way that is comparable to industry standards, so go ahead and sue us,鈥� the panelist said.

Others agreed. 鈥淚f you bring in tech people, you have to give them a seat at the table,鈥� said another panelist. 鈥淪omeone has to be in charge of all this in order for the firm to make progress and handle client-facing issues. You may in fact, have to staff a law firm unconventionally.鈥�

Tech adoption 鈥� Many on the panel said that law firms should be making better use of their own internal data and working with vendors and third parties to leverage the tech software they need. 鈥淵ou have to realize that all the smartest people in the world are not all at your firm,鈥� one panelist explained. 鈥淭hat鈥檚 why it makes sense to go to the outside for tech expertise.鈥�

Indeed, argued another, there is no law firm that is going to outspend tech companies in their investment in AI or GenAI. 鈥淰endors will always out-invest law firms,鈥� the panelist said. 鈥淪o let them, and we can just use the solutions they come up with 鈥� at least for now 鈥� or work with them to create something proprietary for us to use.鈥�

The panel鈥檚 consensus was that law firms should try everything 鈥� using third parties, leveraging their own internal data and tech, and a mix of the two. Ideally, panelists suggested that law firms will want to use their own internal data while getting their tech stack from vendors. In fact, it may be a bit easier than it sounds, one panelist noted, adding that firms can use off-the-shelf tech solutions for the simplest 鈥渂usiness of law鈥� operations, but for other tasks, such as pre-bill reviews, it may be harder to find products that can work for each firm.

“New lawyers can spend their time doing more than just simple rites-of-passage work. If training is used effectively, firms can get their new lawyers to see more of what clients need and understand what the clients鈥� main challenges are.鈥�

Training lawyers 鈥� As to the questions of what work will be impacted and which value-added tasks will fill that available space, one panelist stated: 鈥淎I is not replacing anyone, it鈥檚 just making them more efficient 鈥� but we have to explain that to the client.鈥�

And while some law firm partners may worry about the dearth of dues-paying work being done by new associates and how these new lawyers will be trained, some on the panel said that points to a lack of imagination as to what lawyer training can entail. 鈥淣ew lawyers can spend their time doing more than just simple rites-of-passage work,鈥� one panelist said. 鈥淚f training is used effectively, firms can get their new lawyers to see more of what clients need and understand what the clients鈥� main challenges are.鈥�

Changes to the business model 鈥� Perhaps most importantly, the impact of AI may shake the previously unshakable grip that the billable hour business model has on the legal industry, the panel predicted. While several panelists agreed that the billable hour won鈥檛 die, they noted that its market share may have peaked.

One panelist predicted that a couple years down the road, there will be a reconning: Law firms are going to have to demonstrate how and why their work quality is better, given their freed-up time 鈥� and they will have to justify this to clients in order to be able to raise (or even maintain) their billing rates.

Indeed, others agreed, saying there will be an evolving view of the billing cycle, and it may take years for everyone in the legal industry to figure this out 鈥� from outside law firms to their corporate clients, and from GCs to the rest of the business units within the overall organization.

鈥淚n the future, the billable hour will be among a mix of billing and pricing options,鈥� one panelist forecasted, adding that law firms will still face stiff questions once these options are impacted by AI鈥檚 ability to shave off time from lawyers鈥� tasks. 鈥淲ill less hours mean cheaper? How will firms explain their value-added to clients? For many firms, this is an unknown, even now.鈥�

You can find out more of what you missed at the recent 成人VR视频 Institute鈥檚 annual Law Firm COO & CFO Forums, here.

Further, sustainability as part of the risk and regulatory environment is a new reality for CFOs. No longer a peripheral concern, environmental, social & governance (ESG) factors are now central to corporate strategy, impacting everything from investment decisions to financial reporting. For example, say climate change is a serious or moderate risk for their companies, according to a survey conducted by PwC.

This shift has placed CFOs in a unique position, demanding they navigate new challenges and leverage opportunities presented by this evolving landscape.

Centering data quality amid a regulatory labyrinth

One of the most pressing concerns for CFOs today is the constantly evolving web of ESG regulations. With various frameworks and reporting requirements emerging globally, ensuring data quality and consistency is paramount, according to , Executive Director of , a United Kingdom-based foundation that works toward creating more resilient business models and a more sustainable economy. More specifically, Sparks said that CFOs are particularly concerned with:

• • • Meeting regulatory requirements鈥� A key challenge for CFOs lies in guaranteeing that the ESG data collected is robust and reliable enough to meet the stringent demands of regulatory bodies. This includes ensuring that the data is complete, consistent, and timely.
    • Establishing internal controls鈥� Robust internal data control mechanisms are essential not just for accurate external reporting, but also for making informed internal reports to management to aid in decision-making.
    • Harmonizing reporting standards鈥� For multinational companies, navigating a fragmented landscape of reporting standards across different jurisdictions and customer demands presents a significant challenge. Many CFOs are eagerly awaiting the harmonization promised by bodies like the International Sustainability Standards Board that will allow CFOs and their companies to move beyond the current alphabet soup of voluntary disclosure standards.

Building sustainability into the capital allocation & investment process

As companies commit to ambitious net-zero and other sustainability targets, effectively evaluating capital investments becomes crucial. However, aligning capital allocation with these goals presents its own set of challenges, says Sparks, which include:

• • • Bridging the knowledge gap鈥� A significant hurdle is the lack of understanding within finance and accounting teams about the company’s sustainability goals and the potential impact of capital investments on these goals.
    • Valuing sustainability鈥� Quantifying and incorporating sustainability-related factors into traditional financial models can be difficult. Unlike tangible financial metrics, ESG factors often involve less quantifiable elements, requiring innovative approaches to valuation. For example, factors such as tax incentives, credits, and financial assistance awards for specific projects because those factors can affect how much a project will cost, its optimal location, and the potential return on investment.

To overcome these challenges, fostering collaboration between sustainability and finance teams is necessary so that, jointly, these teams can develop a shared understanding.聽Moreover, finance teams need to be educated about the company’s sustainability targets and their implications for investment decisions.

In addition, teams must collaborate to explore ways to quantify or monetize sustainability factors, even if it involves developing qualitative measures in places where traditional metrics fall short. The Stern School at New York University鈥檚 is an excellent starting place to demonstrate how sustainable business is good business.

Embedding sustainability into a company鈥檚 DNA

Integrating sustainability goes beyond simply checking boxes; it requires embedding ESG principles into the very fabric of an organization’s operations, strategy, and business models. To start, Sparks suggests that CFOs need to work closely with their companies鈥� boards of directors and audit committees, providing those groups with a clear understanding of how sustainability impacts organizations鈥� overall strategy and disclosure requirements. 鈥淭his ensures buy-in from the top and fosters a culture of accountability,鈥� Sparks adds.

One noteworthy development over the last 24 months is the establishment of the position of ESG or sustainability controller. These are typically new positions, responsible for ESG data management, with the individuals in these roles often coming from finance and accounting teams.

Indeed, ESG controllers assist in building sustainability into core company operations, strategy, and business models through an integrated approach that involves various financial workflows and operations. Key areas of focus include establishing a robust ESG data management system, integrating sustainability into capital allocation, and expanding the lens through which capital decisions are made to include the sustainability perspective. One example of the latter is the , which suggests altering capital expenditures (capex) forms to align sustainability with the company鈥檚 long-term strategic focus. This can be done, the Guide suggests, by demonstrating how potential investments improve environmental and social impacts while listing how risks can be avoided by undertaking the project.

To this end, companies can , such as geospatial analytics, natural language processing, and data analytics to optimize sustainability investments and strategies to reduce their carbon footprint, identify decarbonization opportunities by location, and then map those efforts to available tax and financial assistance incentives. By leveraging data and technology, companies can gain new insights into their operations which can potentially lead to more informed action and the identification of competitive advantages and growth opportunities.

CFOs are facing significant challenges and opportunities as they navigate the complex landscape of sustainability. By understanding the key concerns and challenges, CFOs can take a proactive approach to integrating sustainability into their company’s operations, strategy, and business models, ultimately driving long-term value creation for their company, its stakeholders and the environment overall.

For more on the challenges that CFOs face, which were discussed at the recent 成人VR视频 Institute鈥檚 23rd Annual Law Firm COO & CFO Forum, click here.

In fact, climate change worries dominated the top shareholder votes at several major restaurant chains during proxy season, which traditionally occurs in Spring. The Accountability Board, a newly formed shareholder advocacy group focusing on the food industry, submitted resolutions addressing climate concerns at and received at least 50% support.

At the same time, proxy trend expert , Special Counsel at Sullivan & Cromwell, coordinates the firm鈥檚 ESG practice and is part of the team that was drafting the firm鈥檚 12th annual proxy season review, which looks at shareholder proposal across the S&P Composite 1500. In her work, Hu cites other significant developments, including that in Environmental issues, there was a differentiation in proposals with those focusing on only Scope 1 and 2 emissions receiving more support than those that included Scope 3, which focuses on supply chain emissions.

Further, under the Social rubric, Hu points out how the Supreme Court鈥檚 2023 decision in Students for Fair Admissions v. Harvard, in which the court held that race-based affirmative action programs in college admissions processes were unconstitutional, has impacted shareholder proposals around diversity, equity & inclusion (DEI). And from the Governance angle, a recent decision by the Delaware Supreme Court has impacted shareholder proposals around advancing notice bylaws and the director nomination process.

New tactics emerge during 2024 proxy season

Beyond these significant developments concerning ESG-related issues, Hu says she sees two noteworthy themes from the 2024 proxy season that are likely to impact shareholder proposals and company-to-investor engagement going forward. The first is how investors are experimenting with new types of proposals and ways to bring issues to the table. Hu notes how unions led the way with the labor coalition, , for example, launching an effort to replace three Starbucks board members, but withdrawing after progress was made during engagement.

The second, yet less noticed, theme focused on working around Securities and Exchange Commission (SEC) Rule 14a-8, which only allows one proposal per shareholder and聽provides a framework to allow a shareholder to request that a proposal be included in the company’s proxy statement, to be voted upon at the company’s shareholder meeting.

鈥淭he divide between pro- and anti-ESG actions by some states will continue unless there is a Supreme Court decision that restricts state laws.鈥�

Unions submitted five proposals to mining company Warrior Met Coal, and the company voluntarily included all five shareholder proposals on the ballot. When the proposals went to vote, they achieved notable results. The successes at the Warrior Met Coal engagement point to proponents of proposals using a new method to get more than one issue up for a vote and potentially having more success than the typical SEC 14a-8 engagement.

Factors driving reduction of shareholder proposals

Some argue the reduction of ESG-related shareholder proposals in 2024 is evidence of decreased support for ESG issues among investors, but this is not completely accurate, Hu explains, adding that there are other factors influencing this reduction, including:

Increases in regulatory developments 鈥� In fact, ESG-related regulations are on the rise. In situations in which investors are asking a company to do more beyond the regulatory requirement, the company could be exposing itself to greater legal liability. As a result, some investors were more willing to let companies off the hook, given the expanded legal risk exposure.

Ongoing polarization increases uncertainty 鈥� The multifaceted nature of diverging approaches to ESG-related regulation between the United States and the European Union, and among the US federal government and various US states has left some investors hesitant to lean on either side of an issue.

Scrutiny on investors and diverging state laws 鈥� Interestingly, this lack of certainty is forcing more private engagement between companies and their investors. This increase in one-on-one dialogue has focused on whether the board and management could properly oversee companies鈥� courses of action.

To be sure, these emerging ESG issues and new trends and engagement tactics are driving changes in the corporate governance landscape. To manage through the complexity, Hu suggests that in-house counsel stay focused on the material and relevant issues that most impact the company while staying apprised of new legal and regulatory requirements, as well as case law that could impact the organization.

Staying informed is certainly easier said than done, of course. The combined complexity and uncertainty of the environment is making this process more difficult and time consuming. For example, the diverging regulatory approaches between the US and EU create differing regimes of mandatory requirements, Hu explains. In addition, there are emerging issues on the horizon, such as nature, biodiversity, and human rights in the supply chain that have yet to enter the mainstream in the US but are gaining traction in shareholder proposals in the EU.

Looking beyond the US election

As Hu looks out a few months into the post-election environment in the US, she does not expect the uncertainty to subside. 鈥淭he divide between pro- and anti-ESG actions by some states will continue unless there is a Supreme Court decision that restricts state laws,鈥� Hu says.

Yet, as the ESG landscape continues to evolve, companies and investors alike must navigate an increasingly complex and polarized environment. The future of corporate governance and shareholder engagement will likely be shaped by a combination of regulatory changes, emerging issues, and the need for more nuanced, private dialogues between management and stakeholders that requires adaptability and vigilance from all parties involved.

You can find more on , here.

The CFO role is expanding beyond traditional finance functions to encompass broader strategic responsibilities, such as balancing near-term and long-term investment priorities, embracing risk and innovation, developing leadership and talent, and leveraging technology and data. This evolution is profoundly impacting various facets of many organizations, including their internal tax department.

One of the key aspects of the evolving CFO role is its increased involvement in shaping the overall direction of the company. Modern CFOs are not only financial stewards but also strategic partners who drive consensus within the leadership team and provide insights into the external and internal factors that most impact the business.

This shift necessitates closer collaboration between the CFO and the tax department, as tax policies and (ever-changing) tax regulations can have a significant impact on business decisions, such as mergers and acquisitions, international expansion, and changes in capital structure. Indeed, in-house tax professionals are now expected to contribute to their companies鈥� overall strategic planning, providing guidance on how to optimize the company鈥檚 tax position and mitigate tax risks, while aligning with the organization鈥檚 broader financial and business objectives.

The push for data-driven decision making

Another key aspect of the evolving CFO role is the increasing reliance on data analytics in financial decision-making. CFOs are leveraging advanced data analytics tools to gain deeper insights into financial performance, risk management, and value creation. This requires the tax department to be proficient in data management and analytics, transforming raw data into actionable intelligence that supports the broader financial strategy.

Today鈥檚 tax professionals must be able to collect, analyze, and interpret tax data, such as tax liabilities, compliance risks, and opportunities for tax optimization. They must also be able to communicate the tax implications of various scenarios and alternatives to the CFO and other stakeholders, using data visualization and storytelling techniques.

Modern CFOs are not only financial stewards but also strategic partners who drive consensus within the leadership team and provide insights into the external and internal factors that most impact the business.

With regulatory environments becoming more complex and scrutiny from tax authorities intensifying, the CFO’s role in ensuring robust compliance and risk management also has become critical. CFOs are responsible for overseeing the tax compliance function, ensuring that the organization meets its tax obligations in a timely and accurate manner, while minimizing tax exposures and penalties. They are also responsible for managing the tax risk function, identifying and assessing the potential tax risks and opportunities that arise from business activities, transactions, and changes in tax laws.

To support the CFO in these tasks, the tax department must adopt more sophisticated compliance frameworks and risk assessment tools, using advanced technologies such as artificial intelligence (AI) and machine learning to enhance compliance processes, detect anomalies, and mitigate risks proactively.

Technology & talent integration

Further, many CFOs also are driving their organizations鈥� digital transformation agenda 鈥� a critical step toward modernization and improving efficiency within the tax department. To this end, CFOs are compelling their tax departments to integrate new technologies that can streamline tax processes, improve accuracy, and reduce manual workload. These technologies often include cloud computing, robotic process automation, and blockchain, which can enable tax professionals to access and share tax data more efficiently, automate repetitive and low-value tasks, and enhance the security and transparency of tax transactions.

Today鈥檚 CFOs are championing the adoption of these tools to better enhance efficiency and ensure that the tax function can keep pace with the evolving business landscape. They are also driving the implementation of tax technology strategies, ensuring that the tax department has the necessary infrastructure, systems, and skills to leverage these technologies effectively.

In fact, the talent and skills aspect of the internal tax function itself is growing in importance. There is a greater emphasis now on developing a tax department that possesses a diverse skill set. As a result, CFOs are at the forefront of investing in upskilling tax professionals, encouraging continuous learning, and fostering a culture of innovation. This often may include training for tax professionals in new technologies, regulatory changes, and strategic thinking.

Today鈥檚 CFOs are championing the adoption of these tools to better enhance efficiency and ensure that the tax function can keep pace with the evolving business landscape.

The ultimate aim, of course, is to build a tax team that can adapt to changing demands and contribute more effectively to the organization’s goals. In fact, CFOs are also prioritizing the development of their finance teams, focusing on leadership development, talent management, and cultural change as part of this strategy. And overall, they recognize the importance of emotional intelligence and interpersonal skills in driving transformation and achieving strategic goals. They are also mentoring and developing the next generation of finance leaders to ensure a pipeline of talent for future leadership roles within the company.

The global nature of modern businesses means that CFOs must navigate complex international tax landscapes as well, which can have significant implications for the tax department. In many situations, the tax department must manage cross-border tax compliance, transfer pricing, and global tax planning, in order to ensure the organization optimizes its global tax footprint while complying with diverse regulatory requirements.

Again, to this end, CFOs are working closely with tax experts to develop strategies that take into account the tax implications of various business decisions, such as where to locate operations, how to structure transactions, and how to repatriate profits. They are also monitoring the developments in global tax reforms, such as the Organisation for Economic Co-operation and Development鈥檚 Base Erosion and Profit Shifting (BEPS) project, which looks to address the challenges of taxation in the digital economy.

Conclusion

The evolving role of today鈥檚 CFO is reshaping the corporate tax department, driving it towards greater strategic involvement, technological adoption, and enhanced compliance. This transformation will require many tax professionals to develop new skills, embrace innovative tools, and work more collaboratively with other areas of the organization.

As CFOs across the globe continue to take on more prominent roles in steering their companies鈥� strategic direction, the internal tax department must evolve in tandem to support and drive the organization鈥檚 business success.

To learn more about technology鈥檚 impact on corporate tax departments, listen to a recent , now on Spotify