Disclosure reviews are a core part of financial reporting. They make sure financial statements comply with required standards and give stakeholders a complete, transparent picture. But for auditors and finance teams, setting up and completing disclosure reviews can be one of the hardest and most time-consuming tasks.

At first glance, disclosure reviews may seem like a checklist exercise. There are hidden risks that can affect compliance, accuracy, and efficiency.

What is included in a disclosure review?

A disclosure review focuses on whether the narrative and note information in financial statements is complete, accurate, and consistent with the accounting framework. It goes beyond the numbers to confirm that users of the statements can see the whole picture and are not misled.

Key facts that should be covered include:

·  Compliance – Clear statement that the statements follow the relevant standards (IFRS, US GAAP, or local GAAP).

·  Accounting policies – Description of significant policies, with explanations for any changes and their impact.

·  Significant estimates and judgments – Management’s key assumptions and areas of estimation uncertainty.

·  Segment and revenue details – Business segments, revenue recognition methods, and major revenue streams.

· Related-party information – Transactions, outstanding balances, and the nature of relationships.

· Commitments and contingencies – Guarantees, legal claims, or off-balance-sheet obligations.

·  Subsequent events – Material events after the reporting date that affect the financials.

·  Fair-value disclosures – Valuation methods and hierarchy levels for financial instruments or assets.

· Consistency checks – Cross-references, totals, dates, and narrative alignment with audited figures.

The 5 hidden risks of disclosure review

Even a thorough checklist can fail if the review is mostly manual. Disclosure notes are long, technical, and updated under time pressure. Here are the top 5 risks:

1. The checkbox trap

Disclosure checklists are often treated as a formality. Teams tick the boxes to show progress, but that does not guarantee requirements are fully met.

Standards like IFRS and GAAP evolve regularly. New requirements can be introduced each year depending on amendments, industry developments, or client circumstances. What was compliant last year may not be enough this year.

2. Evidence blind spots

One of the most common risks in disclosure review is failing to connect requirements to clear supporting evidence.

Without this link, it becomes difficult for reviewers and auditors to validate disclosures. This slows down the audit, increases the risk of mistakes, and weakens the audit trail.

 3. Heavy reliance on senior expertise

Disclosure reviews require deep knowledge of accounting standards and the entity being audited. Conditional requirements like “if material” or “unless impracticable” often call for professional judgment, which naturally leans on experienced staff.

This concentration of work with senior team members ensures quality but can also limit how much juniors are involved. Without the right support or structured workflows, it becomes harder to spread the workload and build team capacity across engagements.

4. Inconsistent progress tracking

Disclosure checklists can be long and complex. Without a consistent workflow, teams track progress in different ways — spreadsheets, Word documents, or shared drives.

This creates confusion about which items are complete, which are pending, and which need follow-up. Inconsistent tracking increases the risk of missing requirements or duplicating work.

5. The time drain from high-value work

Manual disclosure reviews can take hours or even days, especially for large companies with complex reporting requirements.

The time spent on these repetitive tasks means less time for analysis, interpretation, and advising stakeholders. These are the activities that add real value but often get pushed aside during the reporting cycle.

How automation and AI is changing disclosure reviews

Disclosure reviews do not have to remain a manual process. Automation and AI has the potential to greatly support how finance teams and auditors handle disclosure testing:

• Smarter search and matching – Automation and AI designed specifically for disclosure reviews can surface disclosures across long financial statements in minutes.
• Direct linkage to evidence – Each requirement can be tied directly to a snippet of the financial statement, creating a clear audit trail.
• Scalable workflows – Junior staff can handle more of the process with AI-assisted suggestions, while seniors focus on judgment and oversight.
• Consistency at scale – Automated workflows track progress across checklists and ensure nothing is overlooked.

Automation and AI does not remove professional judgment. Rather, it helps auditors focus on review and interpretation instead of manual searching. If you want to dig deeper, read our take on why automation matters in disclosure testing.

The future of disclosure compliance: Agentic AI

Disclosure Agents are a new way forward. They are part of the DataSnipper Agentic AI initiative with Microsoft, designed to work directly inside Financial Statement Suite.

They are designed to help:

• Cut hours of manual work into minutes
• Provide audit-ready evidence links
• Scale reviews across large teams and subsidiaries
• Allow AI to take the primary grunt work, freeing up time for auditors

In a recent Bloomberg interview (37:08 mark), Vidya Peters, CEO of DataSnipper, said the company is now focused on building agents directly within Microsoft Excel. The goal is to let users complete complex tasks with natural language commands. Instead of executing each step manually, professionals could describe what they want to accomplish, and the agent would deliver results in seconds.

How to navigate the hidden risks in disclosure reviews

Hidden risks in disclosure reviews are real. They create compliance exposure, add pressure on teams, and drain time that could be spent on higher-value work. Automation and Agentic AI make disclosure reviews faster, more consistent, and easier to scale — without losing professional judgment.

Read our official press release on Disclosure Agents

If you're curious about agentic AI, watch our webinar on demand to see how Disclosure Agents, powered by Microsoft’s secure Agentic AI, will be shaping the future of disclosure compliance.