An Integrative Literature Review of Digital Transformation and Financial Reporting Quality

Abstract

Digital transformation has increasingly reshaped accounting processes, financial information systems, internal control mechanisms, and corporate reporting practices. This study aims to synthesize existing literature on the relationship between digital transformation and financial reporting quality and to identify the main mechanisms through which digital technologies influence the relevance, reliability, timeliness, comparability, and transparency of financial information. An integrative literature review was conducted by examining peer-reviewed studies concerning digital accounting, accounting information systems, automation, cloud accounting, artificial intelligence, blockchain, data analytics, internal control, and financial reporting quality. The synthesis indicates that digital transformation can improve financial reporting quality by accelerating transaction processing, reducing manual errors, strengthening data integration, enhancing audit trails, improving access to real-time information, and supporting more consistent reporting procedures. However, the benefits are not automatic. Their effectiveness depends on information-system quality, internal control strength, cybersecurity, data governance, employee competence, organizational readiness, and management commitment. The review also identifies potential risks related to system dependence, data manipulation, privacy, cyber threats, algorithmic bias, and inadequate human oversight. The study concludes that digital transformation contributes most effectively to financial reporting quality when technological adoption is supported by strong governance, competent accounting professionals, and reliable internal controls.