Algorithmic regulation: blockchain and AI for financial disclosure automation

Written by Jason Meyers at Auditchain Labs AG

In the rapidly evolving landscape of financial regulations, regulatory agencies are gearing up to deploy advanced investigative tools powered by artificial intelligence (AI) in 2024. These tools aim to bolster the capabilities in identifying companies that violate disclosure requirements. The eXtensible Business Reporting Language (XBRL) is a machine-readable syntax and is a mandate for corporate filings and for regulatory analysis of financial and business reports in 60 jurisdictions across 100 regulatory agencies.

217 SEC enforcement actions against public companies between January 1, 2021 and October 31, 2023, make clear that regulatory scrutiny of financial and operational disclosure is on the rise. In Europe, the machine readable XBRL instances are now within the scope of comprehensive audit engagements, a directive under the Committee of Auditing Oversight Bodies (CEAOB) since November 9, 2021.

The landscape of the Securities Exchange Commission (SEC) enforcement actions

The SEC’s enforcement actions reveal a noteworthy trend. The year 2024 is expected to either tie or surpass these figures, indicating an intensified focus on disclosure violations, especially those relying heavily on financial data and financial statements. When you combine all the scandals in the audit profession with disclosure violations by their clients, the big question will be if…