AI and the automation of accounting 

9

October

2024

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AI has changed the landscape in many work fields, such as in data, law, finance and even accounting. Recently I have taken an assistant-accounting job at a firm paired with my master studies. I have discovered a lot about AI and what it could do for accounting that I thought were not possible.  Having been there for 2 months, I have learned a lot about accounting itself, but also what AI did for me while I was at the job. According to an article by the open journal of business and management, accountants become more efficient in handling the bookkeeping and become more productive in their work due to the use of AI (peng et al, 2023). I found this to be true as well. 

The first week I began working the invoices in the bookkeeping system, I was very reliant on my own knowledge. I tried categorizing each invoice in a specific item for the ledger, which was confusing sometimes. Because there were a lot of different items and different kind of invoices. With the help of ai however, it showed me what type of invoice belongs to what items in the ledger.  For example, one particular invoice showed me a bill of the restaurant where a particular client of the accounting company was having dinner. At first, I was not sure where this type of cost could be booked in the ledger. I asked AI: “at which item does a restaurant bill belong to in a ledger?” The prompt I gave ChatGPT provided me with this answer:

I asked my employer, who is an RA (registered accountant) for verification is this was true, he confirmed that it was indeed true. From then on, I started using AI a lot more for bookkeeping. Especially for items I was unsure of. It helped me become more knowledgeable, but also helped me to become more efficient and productive. 

Even though there are a lot of benefits of using ai in accounting, there are also downsides. Each bookkeeping for a specific client is different. Tailoring to these clients cannot be done always done through AI. My employer explained to me that the accuracy of knowledge AI has on accounting and bookkeeping is broad, but that I should not always rely on it to keep the books. Because clients sometimes require specific wishes in what purpose their ledger serves and on what books costs are categorized. For example, some clients want to receive a larger tax return. Therefore, they would categorize some cost to a specific item in the ledger that are relevant for that outcome, and others use It to justify cost that they made for the past few months that could be lost in other items, due to inaccuracy of the AI. This type of variety is sometimes very confusing for the AI making some prompts not always accurate to what the client needs. As accepting is also a type of consulting and advisory to companies.

In my opinion, AI is beneficial for the future of financial bookkeeping, and it will probably change a lot of aspects in the financial field. I do however think that when it comes to personalized tailoring to clients with jobs such as consulting and advice, especially in the tax field. It is still of relevancy that accountants or financial advisors take responsibility in helping clients themselves to keep them satisfied and use AI to their benefit. Becoming more efficient and accurate themselves due to the clever use of it.

Peng, Y., Ahmad, S. F., Ahmad, A. Y. B., Al Shaikh, M. S., Daoud, M. K., & Alhamdi, F. M. H. (2023). Riding the waves of artificial intelligence in advancing accounting and its implications for sustainable development goals. Sustainability, 15(19), 14165

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How Digitalisation Affects Accounting

8

October

2021

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Nowadays, instead of focusing on historical data, accountants are taking more strategic roles to become business decision makers. The digital world has enabled companies to capture massive data for their decision-making processes, and financial intelligence professionals shall face up to this radical change. This blog demonstrates what an accountant does in a non-digital context and how the profession is affected by digitalisation. 

The role of traditional accounting

In traditional accounting, financial accountants mostly prepare and confirm the accuracy of companies’ historical financial data, ensuring taxes are paid on time while organizing and maintaining firms’ financial information. According to a study (IMA), around 50% -75% of accounting teams are repeating low-value tasks, while 56% of them are under heavy workloads at the same time. 

How the digital world disrupts traditional accountants

As businesses go digital, the duty of traditional accountants is being revolutionised. Digitalisation generates big data, which radically changes the way enterprises make decisions, from experience and gut-based to data-driven decision making. With financial data savvy and a deep understanding of companies’ operations , accountants shall upgrade their daily tasks to a strategic level. According to Bhimani (2021), the following three trends are inevitable:

  1. Accountants should focus more on predictive insights. With an increasing demand for foresighted data analysis,  descriptive financial reports can no longer fulfill the requirements of companies’ executives.  New-era accountants shall therefore capture the value of big data and come up with insightful predictive reports to serve managers’ needs. 
  2. Create insights from new types of information systems. Digitalisation do not only provide more economic data , but also capture more non-financial information with a great potential facilitating organisaitons’ change. Hence, accountants shall equip themselves with skill sets generating insightful findings from all types of information system, such as data-collecting device and IoT system. 
  3. Subject to more ethical issues  and responsibilities. Due to the amount of data collected from people and entities, accountants are naturally poised to encounter more ethical dilemmas, thus more responsibilities. For example, accountants shall stay updated with data privacy regulations while implementing their daily tasks. 

Overall, technologies should support accountants rather than killing them. Accounting professionals are actually freed by automation and data-driven technologies, not constrained (Higgins, 2021). On one hand, it requires more qualitative input from accountants as businesses go digital. On the other hand, accountants have more chances to participate in strategic decision-making processes. Therefore, organisations should wisely invest in information technologies to free the hands of accountants from repetitive tasks, transforming them into creative strategic decision makers.

References:
Higgins, M. (2021, May 19). The Future Of Accounting: How Will Digital Transformation Impact Accountants? Retrieved October 8, 2021, from https://www.forbes.com/sites/forbestechcouncil/2021/05/19/the-future-of-accounting-how-will-digital-transformation-impact-accountants/?sh=2d02ddc853fb

As businesses go digital, accounting takes on a new meaning. (2021, June 17). Retrieved October 8, 2021, from https://blogs.lse.ac.uk/businessreview/2021/06/18/as-businesses-go-digital-accounting-takes-on-a-new-meaning/

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Will accountants become extinct?

1

October

2019

No ratings yet. Artificial Intelligence (AI), Machine Learning (ML) and robots are taking center stage in workplaces across the globe, while not that long ago it was thought to be things only found in science fiction films. AI is replacing job positions in several industries (e.g. retail, manufacturing, agriculture etc.) and the revolution is not expected to slow down anytime soon. It is anticipated that by the year 2030, 800 million jobs could be replaced with AI (Finance Voice, 2018). As AI technology advances and becomes more powerful, white-collar workers, as accountants, are starting to worry about their future career. Will AI technologies make accountants obsolete?

AI technology is able to complete repetitive tasks at just a fraction of the time it takes humans, with greater accuracy. Furthermore, Machine Learning allows AI platforms to analyze, observe and self-learn data and processes to improve its accuracy over time. AI technology is already capable to handle many accounting functions such as payroll, audit and tax preparation. A big concern is that AI technologies will replace the need for companies to work with accountants at all.

Some say that the new AI technologies does not mean the end for accountants. Their argument is that there will always be a need for that human element – human intelligence – at the other end of AI technology. Accountants need to exercise professional judgement and professional scepticism, which AI technologies and machines cannot. However, accountants should use data analytics and risk and valuation tools to provide, objective, independent and unbiased financial statements. This results in enhanced public confidence and trust (RSM,2018). 

Will AI technology at some point make accountants obsolete? What is the whole point of hiring professional accountants when you can simply invest in a good account software that would carry out all the finance and accounting tasks on your behalf? Or will AI technology and accountants work together instead of replacement? For the sake of professional judgement and scepticism.

References:

Finance Voice. (2018). Is artificial intelligence set to replace accountants in the future. [online] Available at: https://finance.toolbox.com/articles/is-artificial-intelligence-set-to-replace-accountants-in-the-future [Accessed 1 Oct. 2019]

RSM. (2018). Why machines and artificial intelligence will not replace accountants. [online] available at: https://www.rsm.global/singapore/news/why-machines-and-artificial-intelligence-will-not-replace-accountants [Accessed 1 Oct. 2019]

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