Rethinking governance in the age of AI
AI is transforming finance governance, exposing gaps in fraud prevention and oversight. CFOs must move from manual checks to proactive, tech-enabled systems that balance autonomy, compliance and growth.
AI is transforming finance governance, exposing gaps in fraud prevention and oversight. CFOs must move from manual checks to proactive, tech-enabled systems that balance autonomy, compliance and growth.
Traditional finance governance processes, like expense oversight, fraud prevention and budget control, are no longer fit for purpose, and the solution isn’t solely technical – it’s cultural, too.
The pace of technological change is creating both opportunities and threats. On the one hand, GenAI is fuelling more sophisticated fraud.
On the other, finance teams now have a wealth of powerful new tools at their disposal to deliver real-time insights and sharper forecasting. To unlock these benefits though, leaders must first establish governance systems that are built for today’s realities.
The phenomenal growth of AI has enabled it to become quickly embedded into daily operations for most businesses. But while its potential for efficiency and growth is evident, the speed of adoption has exposed serious gaps in oversight. Unless finance leaders rethink their approach to governance, the gap between innovation and control will only widen.
AI outputs are growing more sophisticated by the day, and it’s becoming trickier than ever to distinguish AI from reality.
And this problem is weaving its way into the finance function, as leaders face the challenge of differentiating genuine from fraudulent activity.
Earlier this year, we saw reports of GenAI being used to produce an inauthentic lunch receipt; something that traditional, retrospective checks would almost certainly have missed.
Expense fraud isn’t a new concept. In fact, inflated rations allegedly date as far back as Ancient Egypt.
Fast forward to today, and exaggerated mileage claims have to date been the modern-day headache for the finance department. But this is evolving once again. Now, AI has the ability to scale and disguise fraud at speed.
Finance leaders must therefore be prepared to embrace new ways of thinking and adopt an approach to governance that can effectively counter these new challenges.
Traditional approaches rely too heavily on manual and retrospective checks. In an AI-driven landscape, finance teams must shift to more proactive approaches.
This might include the use of intelligent tools that can detect anomalies before reimbursement or spend-management tools that can detect the presence of AI in receipt images and enforce pre-approved budget functions.
This means that finance teams can eradicate guesswork and unsanctioned spending: less contention, more clarity.
But while technology is a good place to start, adopting a truly proactive governance posture requires a shift in mindset as well. Crucial to this shift is reframing governance as a value driver.
Traditional governance approaches have long suffered from being centrally controlled, hierarchical and admin-heavy – and therefore a burden for both finance teams and employees to navigate.
But when expense processes are automated, accessible and embedded in everyday workflows, governance evolves into a facilitator of autonomy and agility.
Finance leaders who successfully navigate this change will have more time to dedicate to high-value actions and break down silos that hold back growth.
Finance leaders who are serious about long-term transformation must look beyond their tech stack to drive change. The movement towards decentralised expense management is encouraging this trend; with more than three-quarters (78%) of finance leaders trusting team members with company finances.
Empowering employees with greater autonomy over company funds will boost motivation, productivity and agility. In times of economic uncertainty, where the finest of margins can have huge ramifications for companies, fostering the right culture with agility built in will empower the workforce to pivot swiftly and respond to changing market conditions.
But this autonomy must be paired with transparency and oversight. The right AI tools combined with consistent guardrails allow organisations to balance freedom with accountability, without constant surveillance or admin overload.
Another factor that cannot be ignored is regulation. Policymakers are racing to define AI standards, from the EU’s AI Act to UK government consultations. Firms that build robust governance now will not only be better prepared for compliance but will also gain the trust of investors and customers, who increasingly see governance as a marker of resilience.
AI is accelerating and holds the key to a more efficient and strategic future of finance. The finance teams who embrace governance alongside their accelerated AI adoption will be best placed to thrive; benefitting from AI’s potential while mitigating the risks it brings.
By embedding AI into everyday processes, finance leaders can claw back time spent on oversight and reinvest it into strategic activities that help drive growth. Governance should no longer be an obstacle for innovation. Instead, it must be the foundation on which efficiency, agility and trust are built.
The role of the CFO is evolving in this new landscape. No longer just guardians of capital, finance leaders are becoming stewards of data and culture.
By shaping governance that is agile, transparent and tech-enabled, CFOs can help define how organisations grow responsibly in the AI era. The decisions they make now will determine whether governance becomes a constraint or a catalyst for the decade ahead.
Finance leaders who seize this opportunity will safeguard their organisations today, while unlocking new pathways for sustainable growth tomorrow.