Artificial Intelligence in Accounting - Part One: A Transformation

Will artificial intelligence (AI) replace accountants? This is a frequently asked question posed by business owners, CPA professionals, college students and the accounting industry itself. There’s no doubt that AI is transforming accounting processes and delivering significant benefits to businesses. We can expect this trend to continue and possibly accelerate. Still, the underlying concern hinges on whether accountants can make a cultural shift to embrace technology rather than resist it. AI has the potential to assist accountants in solving many of their perennial challenges and elevate their role within organisations. Knowledge is power, so let’s explore the key technologies in accounting AI, their benefits and challenges and how to leverage them for business and professional success.

What Is AI in Accounting?

AI in accounting is powered by four key technologies: machine learning (ML), natural language processing (NLP), robotic process automation (RPA) and optical character recognition (OCR) to analyse vast data sets, identify patterns, make predictions, extract and synthesise structured and unstructured data, and automate tasks, such as data entry, transaction reconciliation and financial reporting. Taken together, these technologies have the potential to serve as a professional game-changer for accountants, accounting, and business processes. AI is particularly useful in accounting because it can intelligently handle much of the heavy lifting, resulting in increased productivity, cost savings and improved support for business decision-making.

Key Takeaways

• AI is revolutionising accounting processes with its ability to analyse, predict and automate tasks, which is exciting to some and concerning for others
• Business benefits of AI include reduced costs and improvements in efficiency, accuracy, scalability, client service, fraud detection and decision support
• AI enables accountants to concentrate on consultative and value-based activities, rather than transactional tasks. This transition may require changes in skills and mindset
• Many of the current challenges involved with AI are likely to resolve as the technology evolves and becomes more mainstream
• Leading-edge accounting software embeds AI functionality and incorporates the best data

AI in Accounting Explained

AI is used by accounting firms and accountants across industries. Accounting firms use AI to enhance various client services, such as bookkeeping, tax preparation and financial audits. The “big four” public accounting firms — Deloitte, EY, PwC and KPMG — have already tapped into AI to transform their financial audit processes. For instance, because AI can quickly analyse entire data sets, auditors have been able to eliminate traditional transaction sampling and reduce the associated risks.

In another example, accounting firms are enhancing the audit process by using AI to identify unusual or outlier transactions as part of planning and risk assessment stages, rather than uncovering them as part of field work. These firms have also started to apply AI to their internal workflows, such as managing audit reviews and approvals. Internal audit teams at companies across the board are following suit. Meanwhile, smaller accounting firms are ramping up more slowly, using AI for research, tax-return preparation and bookkeeping services, but they’re expected to accelerate their pace.

Management accountants at companies of all sizes and industries are implementing AI to make their accounting teams and processes more efficient, improve accuracy and support decision-making. This can be achieved in many ways, including adopting automation for touchless invoice processing, supporting more frequent and comprehensive forecasting, and making data analysis and scenario planning easier and faster. As a result, staff time can be reallocated to tasks that require more thoughtful finesse, such as strategic planning. This is welcome news for chief financial officers (CFOs) and financial controllers who have been trying to evolve their accounting and finance teams to be consultative and value-based, rather than transactional.