TL;DR:
- AI is gaining traction in the accounting profession, with 24% of top-performing CAS practices leveraging AI.
- Key technologies accountants plan to incorporate in 2023 include advanced cybersecurity measures, AI, workflow software, robotic process automation (RPA), and enterprise resource planning (ERP).
- AI improves audit outcomes by enabling auditors to analyze large data sets and identify anomalies and patterns in real time.
- Thomson Reuters’ AI-powered tax and accounting research platform, Checkpoint Edge®, streamlines tax research by providing quick answers to natural language questions.
- E-invoice automation extracts key invoice data, streamlining invoice processing.
- Challenges include access to client data and AI’s limitations in adjusting to uncertain situations, interpreting nuanced language, and providing tailored guidance.
- AI is not designed to replace CPAs but to augment their workflows and elevate their work to higher-value tasks.
- Accountants must adapt and collaborate with AI and hybrid teams to maximize the potential of AI in the accounting profession.
Main AI News:
Artificial intelligence (AI) has transitioned from being merely a buzzword to becoming a driving force in various sectors. In recent years, AI has gained significant traction within the field of accounting, and its transformative power continues to shape the tax and accounting profession. The question is: Is your firm prepared to harness its potential?
Similar to many other industries, the accounting profession recognizes the potential of AI in enhancing efficiency and enabling strained firms to better serve their clients. In fact, a benchmark survey conducted by CPA.com and AICPA PCPS CAS revealed that a remarkable 24 percent of top-performing CAS practices are already leveraging AI.
Moreover, according to the “2022 VSCPA Future of Work Survey,” the top five technologies respondents aimed to incorporate in 2023, ranked by order of importance, were as follows:
- Advanced cybersecurity measures (21 percent)
- AI (14 percent)
- Workflow software (13 percent)
- Robotic process automation (RPA) (10 percent)
- Enterprise resource planning (ERP) (10 percent)
Within the accounting profession, AI is met with both excitement and curiosity, as well as a degree of anxiety. How exactly will AI shape the future of accounting? Is there a possibility of AI replacing certified public accountants (CPAs)? And what challenges lie ahead? In this article, we will delve into these questions and more.
The Current Applications of Artificial Intelligence in Accounting
AI’s application in accounting is not entirely new; however, recent advancements have brought about significant shifts in its implementation. Before exploring these shifts, let us first delve into the various ways AI is currently being utilized in accounting.
One of the major advantages of AI lies in its ability to identify patterns within vast data sets—a feat that surpasses human capability. This attribute makes AI particularly valuable in the field of audit. With AI, auditors can analyze extensive data sets and rapidly detect anomalies and patterns. Consequently, auditors can move away from sampling and instead review all transactions in real-time, resulting in more accurate outcomes. The ability to identify risky transactions and deliver higher-quality audits to clients is a significant improvement.
AI also plays a crucial role in tax research. The abundance of information from numerous sources makes tax research a challenging endeavor. Manually sifting through countless online resources is not only time-consuming and inefficient, but it also increases the risk of errors and misinterpretations. To tackle this issue, Thomson Reuters developed Checkpoint Edge®, an AI-powered tax and accounting research platform. Featuring a sophisticated AI algorithm fueled by comprehensive human-curated data and diverse machine learning features, Checkpoint Edge® enables accountants to find the best answers to natural language questions in the shortest possible time.
Moreover, the rise of e-invoice automation has been another notable development. This automation extracts key invoice data, facilitating the streamlined processing of invoices. According to Domingo Huh, Lead UX Designer for Thomson Reuters Labs, accurate invoices serve as a reliable foundation, offering additional opportunities for maximizing benefits.
The Challenges of AI in Accounting
While AI revolutionizes the way accounting professionals operate and cater to clients, it also presents its fair share of challenges. One significant challenge is gaining access to client data. Without access to such data, accountants become more reactive, limiting their ability to transition from traditional accounting roles to more desirable advisory positions. Huh highlights this concern, stating, “When you don’t have access to that data, you become much more reactive, and that limits the movement of typical accounting disciplines to go from accounting to more maybe of a desirable role of advisory.”
Furthermore, there are certain areas in which AI struggles. For instance, AI finds it difficult to adapt to unseen or uncertain situations. It also faces challenges in gaining semantic understanding from text, interpreting nuanced language, such as legal documents, and providing clear and tailored guidance and advice. Looking ahead, the tax industry is expected to demand greater standards and specifications. Establishing a bridge between custom taxonomies and ontologies, enabling more effective and logical comparison, is a broad objective shared by the industry.
Will AI Replace Certified Public Accountants?
One of the frequently debated questions surrounding AI is whether it will replace CPAs. The short answer is no. AI is not designed to replace humans in the profession but rather to augment workflows and enhance efficiency. However, Huh acknowledges the potential for job displacement, particularly among those who fail to adapt or seek opportunities to elevate their work through the use of AI. The key lies in focusing on higher-value tasks and moving away from mundane, routine responsibilities.
Huh believes that while there are valid concerns, the technology also holds the potential for significant advancements. He states, “While you can say that there is validity to the fears, I think we also know that we can advance much further with that technology. And so, there are different ways that we can look at the future. In some ways, AI will be an autonomous agent, but in other ways, it will augment us beyond what our current capabilities are, and we are still just scratching the surface of the possibilities at this point.”
It is essential to remember that there are skills that AI cannot replicate, such as maintaining and nurturing client relationships. This human element remains crucial in the accounting profession.
The Evolution of AI in Accounting: The Last Six Months
Over the past six months, the landscape of AI in accounting has undergone a profound transformation. A particularly noteworthy shift has been the rise of generative AI. This subfield of AI focuses on creating content from scratch, including text, music, images, and video. In November 2022, generative AI made headlines with the introduction of ChatGPT, a next-generation chatbot developed by OpenAI’s research lab.
KPMG highlights the immediate impact of ChatGPT, stating, “ChatGPT attracted more than a million users in just five days, making it one of the most rapidly adopted new technology platforms in history.” Huh emphasizes that accountants now face the challenge of adapting to two different states: the past, characterized by legacy technology built in a specific age of AI, and the present, an era of artificial general intelligence (AGI) that enables communication, autonomous conversation, and independent task performance. This transition presents numerous opportunities to optimize tasks and achieve more.
Shaping the Future of the Accounting Profession with AI
Moving forward, AI will empower accounting professionals to transition from a reactive approach to a more proactive one when serving clients. Clients demand and expect more from their accountants, and AI-powered solutions will enable accountants to meet and exceed those expectations. Huh states, “[Accountants] want to be able to start thinking in the theoretical space to do more scenario modeling and ideating on more nuanced types of solutions for their clients.”
Huh also emphasizes the need for increased collaboration between accountants and AI, as well as hybrid teams. The future will witness a surge in interactions between humans, AI, and autonomous agents, working collaboratively to achieve optimal outcomes. This transformation in operational dynamics and collaboration will revolutionize the accounting landscape. Huh believes that the past six months have only scratched the surface of what is to come, and seismic shifts will likely occur within the next year or two.
The Advantages of Implementing AI-Powered Tax Software
The future has arrived, and AI continues to reshape the tax and accounting landscape. Firms that embrace AI technology stand to gain numerous advantages. AI-powered tax software enables accountants to work smarter, faster, and transition away from compliance-focused tasks toward higher-value, strategic services.
By harnessing the power of AI, accountants can elevate their roles, streamline operations, and better serve their clients. The possibilities for increased efficiency and improved outcomes are vast, propelling the accounting profession toward a more dynamic and prosperous future.
Conclusion:
The rising influence of artificial intelligence in the accounting industry signifies a significant shift in the market. Firms that embrace AI-powered solutions will gain a competitive edge by enhancing efficiency, improving outcomes, and offering higher-value services to clients. Accountants must be prepared to adapt and collaborate with AI to optimize their tasks and thrive in an evolving industry. The integration of AI presents immense opportunities for growth and success in the accounting market.
