Digital reporting to improve transparency and provide an annual $7.7bn boost to the economy

25 JULY 2023: New modelling from Deloitte Access Economics (DAE) shows mandatory digital financial reporting for all large Australian businesses would grow the economy by up to $7.7 billion annually and support more than 14,000 jobs from 2030. But in Australia digital reporting still remains voluntary, and ASIC is yet to see it used.

Australian financial reporting by the numbers:

• The number of pages in an annual report – 87
• The number of errors in documents lodged with ASIC since 2019 – 8,000
• The number of voluntary digital reports submitted to ASIC since 2010 – 0

Every year, businesses are spending hundreds of hours on financial reporting. On top of that, there is increasing demand for ESG disclosures. Like with many problems today, technology can provide a solution.

A new report released today, Embracing the power of digital corporate reporting: a mandate for change, shows mandatory digital reporting would bring Australia in line with the world’s advanced economies, cut red tape, improve efficiency and reduce errors and duplications.

The report analyses a range of data sources with input from leading Australian businesses to demonstrate why change is critical to the future of our economy and how government policy is the key to unlocking it.

The report makes the following recommendations to the Australian Government:

• Follow the lead of Australia’s major economic partners by mandating digital financial reporting
• Consult industry on implementation
• Establish a coordinating body for a smooth transition and effective implementation
• Design International Sustainability Standards Board (ISSB) standards to be digital-ready as part of the transition process.

Deloitte Australia CEO, Adam Powick said: “Deloitte is at the forefront of this important transition as we propel Australia into the digital reporting realm. The shift to digital reporting will improve transparency while also providing a boost to our economy. This essential structural reform will drive investment and rebuild trust by making Australian companies more transparent and accessible to investors, the market, and the community.”

A 2019 inquiry into the regulation of auditing in Australia noted that the roll out of digital financial reporting has the capacity to assist not just auditing, but the efficient and transparent functioning of financial markets more broadly. Machine-readable financial statements can be easily and accurately analysed not just by audit firms but other interested third parties including regulators and academics. This shift would also create better social and environmental outcomes.

Managing Partner, Audit and Assurance, Jo Gorton said: “Unlike the rest of the world, digital reporting hasn't gained traction in Australia. But the burning platform is the impact of ESG reporting: new climate and sustainability standards will be adopted from 2024, leading to increased reporting requirements for companies.

“Australian businesses have a once in a lifetime opportunity not only to facilitate interest from overseas investors, but also to make meaningful change that will help society as a whole.”

The Deloitte Access Economics report also found that mass participation is crucial for the benefits of mandatory digital reporting to outweigh the costs in the near term. It takes several years for the benefits of implementation to outweigh the costs when businesses act alone, while the impact of economy- wide changes would be profound.

Lead Author, Deloitte Access Economics, John O’Mahony said: “Our report modelling shows a short-term reduction in economic output followed by an average annual net GDP gain of $7.7 billion from 2030 – a $40 billion total gain over 20 years.

“But policy change is vital with voluntary participation proving ineffective. It’s time for Australia to embrace digital reporting and the time to act is now.”