Accounting is a science that’s centuries old. Over the years, numerous tools and resources have made accounting easier, more reliable, and more accurate than ever. In today’s world, combining accounting, automation, and AI can enable businesses to find the right balance between modern technology and brainpower.
As machine learning continues to be built into technologies that we humans rely on for processing information, the future of AI is increasingly built on the assumption that it will continue to reduce our dependence on human labor.
Remember that AI is the only software that can draw conclusions from large quantities of data and modify its functioning based on them. But it’s also a system that quickly learns processes in real time and scales itself to be applied to an entire organization.
Here, we’ll explore the ever-changing relationship between accountants and AI and look into how accountants can use this technology to streamline their processes while supporting their clients.
AI and Accounting
Undoubtedly, AI is here to stay whether you like it. Turning a blind eye to this technology will affect your business in the future. Instead, educate yourself and your firm on how AI can improve your work. Invest in systems that ensure your firm is ahead of the curve and staying caught up as others surge.
If you ae worried that AI could make your employees obsolete, consider that there’s numerous research pointing to how AI can improve accountant productivity by 40%. In fact, this would be an excellent time for CPAs to educate themselves through appropriate training and courses to take maximum advantage of this technology.
The benefits this technology brings are numerous. For example, AI can automate invoice creation and analyze hordes of financial data to suggest anomalies that might point to accounting fraud. As a result, it ensures that businesses can save money and improve the accuracy of their financial reports.
A recent report by Deloitte revealed that 67% of accounting and finance professionals believe that AI will significantly impact the industry within the next five years.
Let’s now take a look at the different ways AI is affecting or will affect the accounting industry:
- AI might replace some traditional accounting jobs — Since most jobs previously done through manual effort can now be automated, AI can replace specific positions in the accounting sector. For instance, traditional accounting services like data entry or auditing are already feeling the heat as the software seamlessly automates these tasks.
- AI will bring out new specialties in accounting — With AI taking up most of the manual tasks, accountants now have the extra bandwidth to add more value to high-impact business tasks. For example, accountants now can choose to offer a more holistic financial consulting service as they continue to improve the reliability and accuracy of their bookkeeping. It also means that they can now offer their services to more clients.
- AI automation can give accountants new insights — Most cloud-based accounting tools are moving beyond regular transaction automation into analysis. With this, machine learning can give many accountants in-depth data on their clients, using which they can provide much better advice.
- AI will change how accounting jobs function — The need for accountants will never disappear. However, their job functions will evolve as AI becomes more involved. For example, a traditional bookkeeper might now become an information systems manager who ensures clients feel like they’re in control of their financial data and cash flow.
- AI will encourage accountants to be more proactive — As machines take over all the manual tasks, accountants have more free time to focus on other business endeavors. One example can be ensuring their clients are always ready for significant financial changes like IPOs, mergers and acquisitions, drawing business loans, conducting periodic strategic reviews, or restructuring.
Initially, accountants would track these transactions in real time, but now, AI can help them track, benchmark, and improve a client’s business even before the transaction starts.
A survey by the AICPA found that 84% of CPAs believe that AI and automation will change the skills needed to be successful in the accounting profession in the next five years.
What Accounting Activities can AI perform?
AI can assist accountants in the following ways:
- Enforcing corporate policy — AI can seamlessly enforce corporate policy while reducing the time it takes to uncover non-compliance issues within financial data. For example, AI can quickly scan employee receipts, credit card transaction history, and travel expenses to look for purchases violating company policy. This makes it much easier for auditors to find errors and ensure employees adhere to company policy.
- Streamlining data entry and analysis — AI can take over tracking time-consuming and tedious transactions. For example, AI simplifies expense tracking. It enables you to extract spend information from receipts and classifies the expense automatically based on the spend category. It also auto-populates the reports so managers can analyze all submitted expenses in one place.
- Reducing the risk of expense fraud — Since AI can audit every submitted expense report in seconds, it can also detect a wide array of irregularities in the expense data. This makes it easier for auditors to spot fraudulent transactions before expense reimbursements happen. Additionally, considering that AI makes the process scalable, it can manage massive data influx without dampening accuracy.
- Performing budget forecasting — AI can create a budget forecast by predicting a company’s future financial performance. For this, it analyzes historical financial data to isolate spending patterns and predict future income and revenue. By combining financial data with other sources, AI creates the most accurate forecasts.
- Facilitates tax preparation — AI can be programmed with the latest tax regulations to ensure an organization stays compliant. It also automatically extracts relevant information from all financial reports to create tax returns.
How Can Accountants Show More Value Against AI?
While there are many benefits of using AI, keep in mind that it will never be able to replace the most critical functions of an accountant. For example, AI doesn’t have the communication, problem-solving, or soft skills that an accountant has. Also, unlike human accountants, it won’t proactively work on improving its skills through learning and development.
With this in mind, let’s take a look at some other ways accountants can show more value than AI:
- Consulting and advice — The No.1 way for accountants to stand out against AI is by offering consultation and advisory services. Think of it, any client who’d like to consult regarding their company’s accounting needs will undoubtedly seek out the advice of a human being over AI.
- Specializations in multiple areas — Rather than seeing AI as the enemy, accountants can use these tools to add to their capabilities. For example, accountants can let AI automate much of the monotonous routine activities so that they can focus on higher-value tasks.
- Learning to use complex software — AI cannot learn to use complex tools. While it can perform specific functions efficiently, it still won’t be able to do it alone. A human eye will always be required to monitor the AI tool's activities.
- Providing the human touch — Despite its functionalities, AI can never remain as personable and compassionate as we can. Most people prefer to interact with a living, breathing human being capable of understanding and empathizing with their needs.
"AI can help us do our job better and faster, but it can never replace the expertise and human judgment of a skilled accountant," says Tim Ryan, Chairman and Senior Partner of PwC US.
What the Future Looks Like for AI in Accounting
As the technology available to accountants rapidly changes, so will the needs of their clients. As a result, businesses in every industry looking to thrive in this fast-paced environment expect more value from their CPAs to aid them in the process.
CPAs are evolving from their traditional roles of number-crunchers to those who can analyze these numbers and provide insights that drive business decisions. And this has been achieved through the use of AI.
Accounting professionals must strike the right balance between human intelligence and AI by understanding how the technology benefits their clients and makes their lives easier by giving them more time to focus on tasks requiring creativity and brainpower.
Rahul Radhakrishnan works as a content marketer at Fyle, an expense management software. He believes everyone has a story to tell. If he isn't writing one, he's hearing one from someone.
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