Unseen AI Commitments: The Hidden Financial Exposures Beyond the Balance Sheet

Internal audit and assurance professionals must recognize that significant financial commitments related to AI, cloud services, and software are often not reflected on traditional balance sheets. These 'shadow borrowings' can severely restrict a company's future flexibility and create substantial financial exposure, even if they comply with GAAP. Boards need a consolidated view of these multi-year contracts to effectively govern and understand the true financial health and strategic agility of their organizations.