The business world is entering a new era shaped by transparency, reliability, and sustainability. Financial reporting is vital in shaping a business’s accountability, strategic future planning, and position in the dynamic market.
Financial reporting isn’t just presenting the numbers to stakeholders. It is a detailed analysis of a company’s financial records and statements to give a clear picture of its financial health.
What will change in 2025 is how financial reporting is done in companies. Unlike traditional processes, we will see more inclusive and impactful financial reporting standards in the coming years. From sustainability reporting to integrated reporting, intelligent data analysis, and AI integration, the future of reporting is set to transform drastically in 2025.
In this blog, we will explore the top 5 trends in financial reporting that are going to change how companies handle their finances and how countries like New Zealand and the US are leading the way in this transformation.
Financial Reporting Trends in 2025
Financial reporting plays a crucial role in helping decision-makers track a company’s performance and plan for future growth and acquisition. That is why it’s important to have a robust financial analysis system that turns raw data into accessible insights for stakeholders to easily understand the present scenario and the near future.
However, we cannot forever trust the conventional methods of financial evaluation. To ensure that your company stays ahead of the competition, you must adopt new techniques to make your reports more comprehensive and useful for decision-making.
Here are key financial reporting trends highlighting how markets in the US and New Zealand will change in 2025.
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Sustainability Reporting and ESG Integration
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In 2023, the global investments in Environmental, Social, & Government (ESG) funds crossed $2.7 trillion, showing a major shift in investor priorities towards sustainability that focuses on long-term value.
This trend is evident in regions like New Zealand, which became the first country to mandate climate-related financial disclosures, and the United States, where the Securities and Exchange Commission (SEC) is moving toward similar requirements.
In 2025, we expect financial and sustainability reporting convergence where ESG factors will be included in the mainstream statements.
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The AI Transformation
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AI in financial reporting can do wonders by enhancing the efficiency and accuracy of the reports. Technologies like artificial intelligence and machine learning can convert complex data into easy-to-understand narratives and reports.
It can:
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- automate processes,
- facilitate smarter data analysis,
- enable real-time reporting & analysis,
- identify irregularities,
- monitor compliance
- Accelerate auditing processes
- Forecast future patterns
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and more.
These will significantly reduce operational costs, avoid non-compliance issues, put a stop to fraudulent activities, and boost the reliability of the reports.
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Global Reporting Standards
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Right now, countries across the globe follow different reporting formats. For instance, the US has a highly prescriptive GAAP format tailored to US regulations. European countries follow IFRS, which is widely accepted among EU member states. New Zealand a nd Australia also follow IFRS for financial consistency and convenience.
Varying financial formats make it difficult to evaluate performance, measure KPIs, and make unified decisions for international companies operating in several countries, especially those in the US. This is because IFRS and GAAP vary greatly when it comes to their laws and compliance requirements.
That is why IASB and FASB have come together to merge their respective accounting standards, and 2025 could be the year we witness the final convergence. This will improve the capital flow by reducing uncertainty and bringing more transparency with a unified global accounting standard.
Plus, it will make it easier for investors and stakeholders to track the performance of companies operating in different countries under the same appointing rules. Also, the cost incurred in individually analyzing and producing several reports as per different accounting standards will go down. So, all in all, it’s a win-win situation for companies in New Zealand and the US after the IASB and FADB convergence project is complete.
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Emphasis On GAAP Metrics
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Non-GAAP metrics are often used by companies to present their reports that highlight core business performance, enabling them to compare performance for specific periods and focus on long-term goals.
EBITDA, adjusted EBITDA, and free cash flow are some of the non-GAAP metrics that companies consider in their reports. While companies aim to provide a clear picture of their growth and future objectives to investors with non-GAAP measures, sometimes these indicators are misleading, and the SEC is taking note of it.
Non-GAAP metrics often confuse investors while comparing the companies and are easily manipulated to hide anomalies in reports. So, the US government agencies have increased their scrutiny of non-GAAP measures, requiring companies to provide clear reconciliations between GAAP and non-GAAP figures
In 2025, we will probably see US companies returning to GAAP metrics as government agencies increase their pressure around GAAP disclosures.
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Regulatory Changes and Compliance Requirements
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Change is inevitable, and 2025 will be the year of major regulatory changes in the US and New Zealand with stricter laws around transparency, sustainability, and compliance.
New Zealand will be implementing GloBE rules effective from 1st January 2025. Under GloBE, multinational enterprises (MNEs) will be required to pay a minimum 15% tax on income earned in each jurisdiction. The law also introduces new compliance requirements for large MNEs with a global annual turnover of EUR 750 million.
The New Zealand Accounting Standards Board has also introduced new accounting rules under their IFRS format. The major changes are related to NZ IFRS 17, which dictates how insurance contracts are reported and disclosed.
In the US, FASB continues to update GAAP with key focus areas like revenue recognition, lease accounting, and financial instruments. This will require companies to adjust their reporting practices accordingly.
As a company in the US or New Zealand, you will have to adjust your accounting and reporting practices to new regulations. We understand that new amendments can be difficult to understand and adhere to. So, we have expert accountants at Indian Muneem who are up-to-date with regulatory changes worldwide. They can help you adopt new laws seamlessly in your process and ensure compliance with high accuracy.
Conclusion
As we move towards 2025, the focus on sustainability, stringent compliance requirements, a unified global accounting format, and an AI-integrated reporting process will define how companies communicate value to their stakeholders.
Indian Muneem, as a pioneer financial accounting company, excels at converting your numbers into business success. We have a team of 460+ CAs/CPAs and accountants offering a range of services from financial reporting to budgeting, year-end accounting, crypto accounting, tax preparation, and more to help you manage your company’s finances with ease and stay compliant always.
Get in touch with our experts today to turn your financial complexities into stories of success and growth.
