BDO develops AI tool for auditing sustainability reports with Deep Neuron Lab

Together with Deep Neuron Lab, the leading specialist for AI-based evaluation of financial reports, the auditing and consulting firm BDO is developing an AI solution that is intended to increase efficiency in auditing and minimize manual activities. It is planned that the new solution will be used as early as 2024 for the first application of the Corporate Sustainability Reporting Directive (CSRD). In Germany alone, the number of companies subject to reporting requirements will increase from 500 to around 15,000 from the 2025 reporting year.

The new solution is based on the Notes Auditor platform, which is already established and used in the audit of financial reporting. In the current audit season, the tool was used in over 2,000 audits of financial statements and was mainly used as a mandate-specific checklist for auditing the completeness of disclosures in the notes. The tool also enables the integrated documentation of the audit of narrative information in a "location". It recognizes reporting information and compares it on the basis of the previous year's reports and comparable documents. The integration of artificial intelligence into the audit process optimizes workflows. Capacities can be deployed more effectively, while the quality of the audit is significantly improved. "The use of new technologies guarantees an increase in audit quality. It often starts with the preparation of the often unstructured data, which first has to be made accessible for data analysis - AI can take the pressure off us here. Our experts can then focus more on the relevant areas of the audit that require expertise and experience," emphasizes Andrea Bruckner, Co-CEO at BDO.

Development for sustainability reporting

When developing the tool for auditing sustainability reports, it is important to bear in mind that the processes of the audited companies may not yet be established. Many companies are currently preparing their first sustainability report. This means that the ability to react to adjustments in the preparation process plays a major role. "Extending the Notes Auditor to non-financial reporting is the logical next step for us. Having already supported over 10,000 financial audits, we are now taking on the challenge of developing an AI product for the emerging ESRS sustainability reporting. This is a complex task without historical data, and the partnership with BDO is a key enabler," says Andreas Schindler, DNL CEO and founder.

In the first step, BDO experts from the Audit & Assurance division will test the tool from a user perspective In coordination with DNL, they will incorporate their assessment and experience from the audit into the further development.

Initial application planned for 2024

The tool is to be used in testing before the end of this year. The two cooperation partners are thus meeting the growing demand in the market. The CSRD, which recently came into force, will increase the number of companies subject to reporting requirements for the 2025 reporting year from around 500 to almost 15,000. "The tool comes at exactly the right time. With the AI solution, we can process the first wave of sustainability reports straight away," says Arne Stratmann, Partner in the National Office Audit & Assurance. Like many AI models, the new tool gets better and better with every application. For the audit of subsequent reports, the tool compares the previous year's responses, which sustainably increases the audit quality.

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