Artificial intelligence is not a recent innovation in the accounting profession; it has already become part of financial practices. According to the industry estimators, more than 60% of the daily accounting services, including data entry, reconciliations, invoice processing, and simple reporting, can now be computerized with the assistance of AI-powered systems.
Based on the significant accounting platforms, the companies, which are leveraging automation, shorten close cycles by 30% to 50% and reduce process costs by up to 40 percent (AI Accountant).
This transformation is not an imaginary one. AI-powered tools are already processing millions of transactions in seconds, quirks are detected which a human being would not have spotted, and tax regulations are being applied with machine-like consistency (GSB).
Algorithms trained over decades of financial information can now perform what would have been done by groups of junior accountants in real time. The implication of the fact that the traditional accounting operating model is under pressure is inevitable.
The accounting and bookkeeping is evolving with the existing advancement of AI, which integrates predictive analytics, continuous auditing, automated compliance, and real-time forecasting. This is no longer a question of whether AI will transform accounting or not, but how and to what extent.
What is that leaving accounting professionals with?
Will AI eliminate the profession of accountants, or will it enhance them, so that they are no longer an implementing profession, but a judgmental one, strategic and advisory?
In this article, the authors analyze the data, the reality of automation, and the real sign that the arrival of AI gives for the future of the accounting profession.
The Use of AI in the Accounting World:
Machine learning and natural language processing are AI technologies transforming accounting work. These are just a few applications that suggest the influence of AI in accounting (Bill):
Expense Management:
The digital receipts are connected with the transactions using accounting software. This assists in monitoring and controlling costs and being organized.
Financial Reporting:
What took weeks to create only a few days ago is created by AI, and the provision of real-time financial reports offers fast reporting. Additionally, the reports have lower risks of human error.
Bank Reconciliation:
Artificial intelligence simplifies the process of matching transactions with bank statements and accounting records (Global FPO).
Payroll management:
With the automation of the process of computing employee wages, tax and other deductions, then the employees are paid on time.
Accounts Payable:
The accounting software, such as Docyt, automates the payable accounts of businesses. Automated payments, credit card reconciliation, cost reports, and receipts for automated discounts. This will make transactions be registered more quickly and accurately.
Data Analysis:
AI can process financial data, assist in describing trends, and make suggestions. This assists organizations in tracking financial performance and making decisions on time.
Cash Visibility and Forecasting:
One of the most important things to consider in investment decisions is cash visibility. F&A teams currently prefer utilizing contemporary accounting tools to predict cash flows, create trend reports, and monitor the most important indicators, such as sales forecasts. This assists the accountants in preparing reports with the accounting software with several sources of data.
Anomaly Detection
One of the most effective uses of AI in accounting is its ability to detect anomalies. Anomaly detection in large amounts of financial data can help prevent fraud and manage risk (Sage).
Read more about how accounting and technology are assisting accountants here.
Will AI replace accounting?
The fear of AI replacing accountants has sparked debates about the future role of human professionals in the field.
OpenAI issued a paper stating what professions will likely be exposed to AI. Accountants and auditors were at the top of the occupations with the highest exposure to AI. According to the paper, these professions are 100 percent exposed.
Now, before you start searching for alternative career options. Or add keywords like “AI-friendly finance guru” and “algorithm whisperer” to your LinkedIn skills section (hoping to catch the attention of recruiters looking for humans who can coexist with machines). Hear us out!
Yes, as accountants and finance professionals, we did show up with 100% exposure to AIv (Sage). But what does that even mean? 100% exposed? Does this mean AI will replace 100 percent of all our accounting and auditing tasks? Or will AI replace all accountants?
The answer is no. The profession being 100% exposed to AI means that our jobs will be reduced by 50% with GPT-powered software. So, imagine all your tasks as an accountant/auditor taking less time.
Still, will AI replace accountants?
Our answer: No. AI will change the way we carry out most of our accounting tasks. However, the significance of accountants will not lessen.
On the contrary, the role of finance professionals will become more significant as experts will be required to oversee critical processes. We also see a future of accounting where accountants are actively involved in regularly evaluating and assessing AI systems.
While many accounting tasks can be automated, this does not mean that all organizations will choose to automate them. Organizations have different requirements regarding their sector, objectives, business model, compliance, and legal regulations (Sage). So, companies will likely try to balance which tasks should be automated and which shouldn’t.
Biggest Challenges in AI Adoption
Staying Competitive
Firms and professionals in the accounting industry must navigate the changing dynamics to remain competitive. As they say, AI won’t replace accountants. Rather, it will replace accountants who don’t know how to use AI (IBM). Hence, accounting firms should adapt their skill sets and transform their roles to remain relevant in an industry driven by technological innovation.
Maintaining Professional Standards
The evolving landscape necessitates carefully examining how accountants can uphold their professional standards and ethical obligations in the face of technological disruptions.
AI Hallucinations
AI hallucinations are one of the big reasons why the accounting world may hesitate to adopt AI in the broader context. Accurate and reliable results are crucial in accounting tasks, and any hallucination or distortion of financial information can be a significant issue.
An example of this in the accounting world is submitting data to AI for analysis. The AI fails to analyze data correctly and provides an unrealistic financial data representation.
Large language models (LLMs) lack independent reasoning capabilities and may struggle to differentiate between reliable and unreliable sources of information. Given their training on a vast range of internet data, they can be immersed in a plethora of inaccurate information. Learn more about how AI companies are trying to reduce AI hallucinations here.
Ethical Concerns Regarding AI
The use of AI raises ethical concerns in the finance sector and other professions. Accounting teams must collaborate to ensure that AI models are used ethically across the company. ACCA Global guides how AI can be adopted in companies ethically. There are five areas in organizations where the use of AI raises ethical challenges:
- Strategic Vision
- Risk management
- Data governance
- Investment Financing
- People, process, culture
Complex Accounting Software
Many accounting solutions are too challenging and expensive for companies. However, there are tier plans based on the company’s requirements. As companies shift towards automation, it is a challenge to provide training to everyone on using the software.
Data Security
Any company’s financial information is sensitive and mandates strict security measures to prevent unauthorized access. It is vital to adopt measures to prevent data breaches.
Future of Accounting Promises Opportunities to Accountants
According to a Deloitte poll, 82% of HR managers for accounting positions in public companies and 69% at private companies have stated that there is a shortage of accountants (Hire CFO). AI adoption can reduce the time an accountant spends on accounting work.
This creates opportunities for accountants to focus on higher-level tasks. This also creates opportunities for students interested in accounting and tech to opt for accounting roles.
An example of a finance role that has transformed over the years is that of a CFO, Chief Finance Officer. CFOs progressively embrace a value-centric approach in their responsibilities, signifying a shift toward a role akin to a Chief Value Officer. The CFO position has evolved considerably from its traditional perspective while preserving its fundamental responsibilities.
The future of accounting may involve increased collaboration between accountants and AI technologies. We see a future with professionals utilizing AI tools to streamline routine tasks, allowing them to focus on more strategic and nuanced aspects of financial management.
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Future-Proofing Your Role as an Accountant
AI has made accountants question their job security and the nature of their job role in the future. As AI continues to improve and automate routine accounting tasks, accountants face the challenge of adapting to a machine doing their work.
Accountants need to keep abreast of the trends (Business Insider). Many companies now expect accountants to be involved in the company’s decision-making. Hence, they should start thinking about delivering more value to the stakeholders while focusing on cost and efficiency.
Decision-making has transitioned from a monthly routine to a continual process, with financial acumen emerging as a crucial skill highly pertinent to the future organizational landscape. Accountancy is transforming to be real-time, customer-centric, forward-looking, and strategically decisive.
Here’s what accountants can do to future-proof their roles:
Be flexible
Have a flexible and adaptable career mindset. As future roles become uncertain, have a risk-tolerant attitude. Take advantage of opportunities and newer roles.
Be more tech-savvy
As accountancy and technology converge, it’s time to build your knowledge around the evolving technology.
Re-learn
Developing a new approach to learning. Learn to unlearn and relearn.
Learn data
As technology advances, accountants who harness data’s power are in a better position to provide valuable contributions to organizational success.
Key Takeaways
AI replacing accountants is a topic of ongoing discussion in technology and finance. While some speculate about the potential for AI to replace accountants, the integration of technology is more likely to complement and augment the capabilities of accounting professionals. Despite the advancements in AI technology, the role of accountants is expected to become even more crucial in the years ahead.
Whether accountants refine organizational risk management, conduct data analysis to support internal decision-making, or produce comprehensive reports for a holistic view of organizational performance, their essential contribution remains pivotal in the global endeavor to construct sustainable businesses. This highlights the unique value that human expertise brings to the field amidst technological advancements.
