The development in technology across numerous industries has meant opportunities for advancement in how professionals do business. Accounting is no exception.
What is AI
Artificial intelligence (AI) is the simulation of human intelligence processes by machines, especially computer systems. These processes include learning (the acquisition of information and rules for using the information), reasoning (using rules to reach approximate or definite conclusions) and self-correction.
How will it change the accounting industry
From automating time-consuming and tedious tasks to analysing data with greater efficiency and accuracy, AI is significantly transforming businesses and helping employees to work quicker and better. In some cases, the introduction of this technology has allowed companies, which once had several employees to manually process lots of work, to relocate those employees to more valuable areas of the business.
Despite the obvious benefits that AI can bring, there is much concern that the technology poses a threat to professionals such as accountants. While the technology may remove the need for accountants to perform lower level jobs and more traditional jobs, it is not possible to replace human accountants or accounting departments completely.
What are the positives and negatives of AI’s rise in the accounting industry
On the one hand, firms would rather avoid the changes. The technology may force firms to make additional investments that are costly up front or to rethink business models that are currently successful. Anyone that struggles to adapt can hardly have a place in this new market.
On the other hand, AI creates opportunities for companies. Accountants and financial professionals take on more important roles with corresponding compensation. Those who are willing to adjust, learn and change will find that their future even brighter.
Current approaches to AI
Innovation leaders are actively embracing AI. One of the best examples of AI use in accounting is the review of high volumes of contracts. Before the application of AI, a team might read through hundreds of thousands of legal documents looking for a change of control provisions during a client’s sale of a business unit. This approach used to keep dozens of employees fully occupied for half a year. But now, a team of six to eight members can use an AI system to complete the same task in less than a month.
Similarly, firms are using AI to review lease accounting standards. When the IRS issues a new lease regulation, large companies have to manually re-examine tens of thousands of leases to comply with the new law. Using NLP to extract information and a human-in-the-loop to validate the results, the AI system is three times more reliable and twice as efficient as previous humans-only teams.
Moving forward, the ways in which AI will continue to impact the accounting industry is perhaps best summed up by Booz Allen Hamilton Vice President Angela Zutavern in her book The Mathematical Corporation, “The most powerful weapon in business today is the alliance between the mathematical smarts of machines and the imaginative human intellect of great leaders. Together they make the mathematical corporation, the business model of the future.”