Agentic AI, Risk Alignment and Financial Reporting: Staying Ahead of Change

As companies move through Q1 reporting and into the next phase of the year, accounting, tax and SEC considerations continue to evolve beyond technical compliance. In Weaver’s Accounting and SEC Update: Q1 2026 webinar, our professionals highlighted a clear shift: artificial intelligence is moving from experimentation into execution, enterprise risk management is becoming more closely aligned with external disclosures, and new tax provision requirements and accounting standards are increasing complexity for public companies. The following summary highlights key takeaways from the webinar and what they mean for finance leaders.

Agentic AI Developments

Artificial intelligence continues to dominate discussion, but the conversation is shifting. Rather than focusing on generative tools that assist with discrete tasks, organizations are increasingly exploring “agentic” AI systems that can reason, plan and execute multistep workflows, not just respond to prompts, with limited human intervention. From rule-based automation to generative assistance to agentic systems, this shift moves AI from a productivity tool to an operational participant in business processes.

This evolution represents a meaningful change for finance and accounting functions. Historically, automation has focused on accelerating processes such as reconciliations, forecasting and close activities. Agentic AI extends this by incorporating judgment into those processes, allowing systems not only to execute tasks but to analyze results, identify anomalies and recommend actions.

A practical example presented in the webinar involves cash flow forecasting at a fictional company. In many organizations, forecasting remains a manual, time-intensive process dependent on a small number of individuals. By contrast, an AI-enabled forecasting agent can continuously pull data from multiple systems, update assumptions based on recent trends and generate forecasts across multiple dimensions in near real time.

The result is not only a significant reduction in manual effort, but also more dynamic and actionable insights. Forecasts can be refreshed quickly as business conditions change, and outputs can be tailored for different stakeholders across finance, treasury and operations.

In this example, the AI-powered agent saved approximately 260 hours per year, reducing manual forecasting work that previously required three to five hours to a 10 to 15-minute automated run. At a blended finance staff rate of $150/hour, this equates to more than $39,000 in annual cost savings, with additional upside during high-demand crunch periods. It also improves reliability by producing a more consistent, automated forecast.

Importantly, this shift does not eliminate the need for human involvement and oversight. Leading approaches embed AI within structured workflows that include transparency, auditability and human review of key assumptions and outputs. In this sense, AI adoption is not simply a technology decision, but also a governance and risk decision. When designed properly, AI can strengthen the control environment and enhance the human element of review, rather than bypass it.

In practice, this governance approach closely mirrors traditional model risk frameworks used in financial services. Organizations maintain a centralized inventory of AI agents and evaluate each use case based on its potential impact, with higher-risk applications, such as those affecting financial reporting or customer outcomes, subject to more rigorous controls, validation, monitoring and human oversight.

Enterprise Risk Management Considerations

As operational and regulatory expectations evolve, companies are placing greater emphasis on aligning enterprise risk management (ERM) processes with external disclosures, particularly Form 10-K Item 1A risk factors.

An effective ERM framework starts with clearly defined risk categories across the organization, such as strategic, operational, financial, regulatory, technology and environmental risks, and a structured process for identifying both entity-level and process-level risk events, which are how risks manifest and show up. These risk events are then assessed based on impact, likelihood, velocity and persistence, forming the foundation of the company’s risk profile.

From a governance perspective, responsibility for risk management is distributed across multiple layers of the organization. The board retains overall oversight of risk, while the audit committee monitors risk management activities and internal audit outcomes. A cross-functional risk management committee is typically responsible for maintaining the risk inventory, assessing emerging risks and reporting to leadership, while the disclosure committee evaluates whether identified risks rise to the level of external disclosure.

Business units play a critical role as well, maintaining risk registers, monitoring risk mitigation activities and reporting changes in risk exposure. This creates a continuous flow of information from the operational level up through management and ultimately to the board, supporting both decision-making and disclosure.

Despite this structure, organizations should align top entity-level risks monitored and managed with external disclosures. Form 10-K (Item 1A) requires disclosure of material risks a company faces, including operational, financial, legal and market challenges. Risks must be listed in order of importance to guide investors on potential vulnerabilities, providing insight into future performance. Form 10-Q does not require the inclusion of risk factors unless there have been “material changes,” which would then require the need to update investors on changes such as economic downturns, regulatory shifts or cybersecurity threats.

The webinar highlighted several common gaps, including inconsistent definitions of risk across functions, challenges in linking operational risks to board-level disclosures and unclear thresholds for escalation. Differences in risk tolerance between management and the board can further complicate alignment, particularly when determining which risks are sufficiently material to disclose.

To address these challenges, companies should periodically reconcile their internal risk inventory with Form 10-K Item 1A disclosures. This process involves identifying differences in how risks are categorized, evaluated and communicated, and determining whether those differences are intentional or indicative of misalignment. It also requires close collaboration between finance, risk management and legal teams to ensure that disclosures accurately reflect the company’s current risk profile.

Ultimately, ERM should be a dynamic process. Risk assessments should be revisited regularly, not only at year-end, but throughout the year, to capture emerging risks, changes in business operations and evolving external conditions. When ERM and disclosure processes are aligned, organizations benefit from a clearer understanding of risk, stronger governance and more effective communication with stakeholders.

Consistency across messaging, transparency in judgment and alignment between internal processes and external reporting are increasingly critical to maintaining credibility with regulators and investors.

Accounting Standards Update

Several recent accounting standard updates highlight the increasing complexity of financial reporting and the importance of early evaluation and cross-functional coordination. Key updates include:

Credit losses: ASU 2025-08 introduces additional guidance for purchased financial assets, particularly around “distinguishing between purchased credit deteriorated (PCD) assets and those without credit deterioration (non-PCD).” For PCD assets — those with more-than-insignificant credit deterioration since origination — companies apply a “gross-up” approach under current GAAP, recognizing an allowance for credit losses at the acquisition date with a corresponding adjustment to the purchase price. For non-PCD assets, the allowance is recorded through credit loss expense at the acquisition date under current GAAP, which many argued introduces complexity and impacts comparability.

To address these concerns, the update introduces the concept of “purchased seasoned loans,” which are loans acquired without credit deterioration but that meet certain seasoning criteria, which includes (1) the assets were originated at least 90 days prior to their acquisition, and (2) the transferee was not involved in the origination. These loans are also accounted for using the gross-up approach, conforming with PCD treatment in current GAAP.

Hedge accounting: ASU 2025-09 includes several targeted improvements aimed at reducing complexity while maintaining discipline in application. Among the key changes, companies may now group forecasted transactions in cash flow hedges based on similar risk exposure, rather than requiring a shared risk exposure. The update also introduces new flexibility for hedging interest payments on “choose-your-rate” debt instruments and allows for hedge accounting of certain components of nonfinancial transactions.

Additional provisions eliminate certain constraints, such as the requirement to apply the net written option test when certain compound derivatives are used, while also resolving presentation mismatches in dual hedge strategies involving foreign-currency-denominated debt. While these changes provide greater flexibility, they also require careful documentation and coordination across accounting and treasury teams.

Government grants: ASU 2025-10 establishes a comprehensive framework for recognizing and measuring government grants received by business entities (which excludes not-for-profit entities and employee benefit plans), an area where U.S. GAAP has historically lacked explicit guidance.

This framework is intended to reduce diversity in practice, as companies have historically analogized to international standards or not-for-profit guidance, often applying those models inconsistently. As a result, organizations will need to revisit existing accounting policies, assess transition approaches and ensure systems and controls support the new requirements.

Under the new standard, a grant is not recognized until it is probable that the entity will both comply with the conditions attached to the grant and receive the funds. The guidance distinguishes between grants related to assets and those related to income. For grants related to assets, an entity may elect to recognize either as deferred income or as a reduction of the asset’s carrying value, while grants related to income are recognized systematically over the periods in which the related costs are incurred.

Across all of these updates, the common theme is that implementation will extend beyond technical accounting. Companies may need to update internal policies, enhance data collection processes and align accounting, tax and operational teams to support consistent application. Early evaluation will be critical to avoiding last-minute implementation challenges and ensuring a smooth transition.

Tax Reporting Reminders

Income tax accounting remains one of the more judgment-intensive areas of financial reporting, particularly in the first quarter when companies establish or update their annual effective tax rate (ETR).

Determining the Q1 ETR requires companies to project full-year pre-tax income and the related tax effects across jurisdictions, often with limited visibility early in the year. Changes in earnings forecasts, geographic mix or tax strategies can significantly affect the ETR, creating volatility in quarterly results. Even relatively small shifts in assumptions can have an outsized impact, particularly for companies with operations in multiple tax jurisdictions.

The webinar emphasized that alignment between tax provision inputs and broader financial forecasts is critical. The tax provision should reflect the same underlying assumptions used in financial planning and forecasting. Misalignment between these processes can lead to unexpected adjustments, inconsistencies in reporting and increased scrutiny from auditors and regulators.

In addition, companies must carefully evaluate the impact of discrete items, such as changes in valuation allowances, audit settlements, stock-based compensation or changes in tax law. These items can significantly affect the quarterly provision and should be clearly identified and supported.

Ongoing federal and state tax uncertainty also continues to play a role. Extraordinary events and changes in the overall economic environment can dictate interim reassessment of deferred tax assets and liabilities, valuation allowances and related disclosures, potentially leading to discrete items. Similarly, evolving state and local tax rules, including economic nexus and market-based sourcing, can affect the jurisdictional mix of income and the overall ETR.

To manage these complexities, companies should focus on maintaining clear documentation, updating forecasts regularly and coordinating closely across tax, accounting and finance teams. A proactive, integrated approach helps reduce volatility, improve forecasting and support more consistent reporting.

Regulatory and Governance Update

There has continued to be a shift in regulatory oversight under the current administration, with the stated intent to refocus priorities on the most critical areas for investors and stakeholders. This can be seen in both policy and personnel, demonstrated by the turnover of four out of five PCAOB board members. SEC Chairman Paul Atkins stated that he is “confident that this new Board will usher in a new day at the PCAOB – one of sensible, efficient oversight of auditors.” This change was also accompanied by a 9% reduction in annual budget, including significant reductions to board member salaries.

The ultimate impact on standards and how audits will be executed remains to be seen, but the indicated changes align with the priorities outlined by the SEC chief accountant in December, which included restructuring of the inspections program, increased transparency and responsiveness, and implementation of a structured consultation process with the firms. There is also an expected emphasis on seeking greater alignment with international standards.

The update also included proxy season reminders. While there have not been significant new rule implementations as there were in recent years, companies are facing a period of changes where previous rules and areas of emphasis (namely ESG and DEI matters) have been halted or overturned, leading to uncertainty.   Incentive compensation plans and related disclosures remain an important and challenging topic, with focus on the metrics used to measure performance (including non-GAAP measures), as well as oversight and execution of compensation clawback programs.

Companies should also remain aware of common proxy missteps or challenges, including issues that arise from failure to get timely and coordinated participation from different parties such as the board, accounting, investor relations, human resources and counsel. Proxy materials should also focus on emerging trends and technology, including board oversight of AI and cybersecurity.

Strong disclosure controls and procedures remain critical. These controls must extend beyond financial data to include the processes used to gather, evaluate and communicate information across the organization.

Bringing It All Together

The Q1 2026 update reflects a broader shift in financial reporting and governance. Artificial intelligence is moving into core finance processes, requiring both operational integration and robust oversight. Enterprise risk management is becoming more closely tied to external disclosures, reinforcing the need for alignment and consistency. Tax provision and accounting requirements continue to introduce complexity, placing greater demands on planning, coordination and judgment.

For finance leaders, success in this environment depends on coordination—bringing together accounting, tax, risk and reporting functions to support accurate, timely and transparent financial reporting. Organizations that take a proactive, coordinated approach will be better positioned to navigate evolving expectations and maintain confidence with regulators, investors and other stakeholders.

As reporting expectations continue to evolve, aligning accounting, tax, risk and governance processes is essential to maintaining accurate, transparent reporting. Weaver’s professionals can help organizations assess readiness, strengthen reporting frameworks and navigate emerging requirements with confidence.

Stay in Touch

Weaver’s accounting and tax advisors offer companies several ways to sharpen their focus on upcoming accounting and tax regulations.

Sign up for Weaver’s Quarterly Accounting and SEC Update webinars, podcasts and the Executive Resource Center.

To discuss your unique circumstances, we encourage you to contact us directly to schedule a consultation.

Weaver’s Hanna Lee, senior manager, contributed to the presentation.

©2026

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