The Impact of AI on Accounting: A Look Ahead

Artificial Intelligence (AI) is no longer just a buzzword; it’s rapidly shaping how we live and work. As a knowledge professional using generative AI daily, I’ve seen firsthand how much it has boosted my productivity in ways that were unimaginable just a few months ago. While its potential to disrupt industries is clear, the implications for accounting professionals, in particular, are significant.

Learning Mindset: Key to the Future

I recently attended a webinar hosted by the Bombay Chartered Accountants Society. Veteran professional Mr. Haribhakti shared his vision for the future of the profession in 2047. What struck me most wasn’t just his views but his approach to staying relevant in a changing world. His ability to adapt to new-age concepts like AI showed me the importance of maintaining a learning mindset.

While AI will undoubtedly transform how we work, the key takeaway for me was how professionals should approach these advancements with curiosity and adaptability. As the future unfolds, human intelligence will be challenged like never before.

Key Areas of Impact

The following outlines what I believe are the key areas where AI will have a significant impact on the accounting profession.

Automation of Data Entry: A Disruption in Waiting

One of the most impacted areas in accounting is likely to be data entry. Today, we have tools like OCR (Optical Character Recognition) and IDP (Image Data Processing), but they still lack the accuracy needed for perfect invoice processing. AI will push this accuracy closer to 100%, removing much of the manual work in data entry.

However, the real game-changer is when AI systems can apply logic and context to automate data entry fully. This could spell the end for low-level jobs in data entry, but it will streamline workflows, helping professionals focus on more value-added activities.

Trial Balance Mapping: Improving Accuracy with AI

In auditing, trial balance mapping is foundational for financial analysis, ratio calculations, and year-over-year comparisons. Current tools for mapping trial balances across different reporting frameworks (IGAP, US GAAP, IFRS) often struggle to get it right. AI, with its advanced classification and pattern recognition, can significantly improve the accuracy of this task.

While current tools only achieve 40-50% accuracy, AI has the potential to push that to 80-90%. Even then, professionals will still need to review the output. The expertise of accountants will remain crucial in ensuring the accuracy of this foundational task.

Reconciliation: AI Tools Improving Efficiency

Reconciliation is another time-consuming task that accountants face. Over the years, software has been developed to reconcile books with customer statements and other data. However, none of these tools have been completely reliable.

With AI, the accuracy and efficiency of reconciliation will improve drastically. Automated communication and dialogue features will help accountants spend less time on reconciliations, freeing them up for more strategic work. Yet, human oversight will still be needed to provide assurance.

Data Analysis: NLP and AI Leveling the Playing Field

Data analysis is evolving rapidly with AI. In our firm, we have started using Copilot Pro within Excel, which provides access to Python libraries and advanced features through natural language processing (NLP). With these tools, data analysis is becoming more accessible to professionals without deep technical expertise.

AI and NLP will reduce the barrier for entry into data analysis, much like how they might impact other fields like image or video editing. However, in accounting, where analysis requires in-depth knowledge, AI will aid, not replace, the professional’s role.

The Future of Compliance: Automated and Seamless

Mr. Haribhakti also shared his vision for automated tax returns in the future. He believes that by 2047 (or even before), governments will have access to so much data that tax returns may be automatically generated based on transactions in bank accounts. Individuals or businesses may simply accept these returns and have their taxes debited automatically, creating a seamless compliance experience.

I share this vision, especially considering how much data governments already have through GST and other systems. However, the role of accountants will evolve, with professionals moving from compliance executors to litigators and advisors as disputes over automated calculations arise.

Assurance and the Role of Audit Partners

In assurance engagements, AI will significantly impact how audit teams work. AI tools can assist in data analysis and evidence gathering, which currently take up much of the audit team’s time. However, the final conclusion, based on the audit partner’s experience and judgment, remains irreplaceable for now.

Even though AI might change how audit partners reach conclusions, human oversight and the ability to interpret evidence will remain central to the audit process.

Adapting to AI: A New Reality for Accountants

With any new technology, there is a learning curve. AI, particularly generative AI tools like ChatGPT, has been adopted incredibly quickly. For accountants, it’s already proving its value in project planning, communication, and productivity. Those who embraced AI early are seeing immense benefits in time management and workflow efficiency.

However, the rapid adoption of AI also raises concerns about data security and privacy, particularly in an industry as sensitive as accounting. As we move forward, balancing the adoption of AI with strict data security protocols will be essential. Moreover, the bigger question remains— how far will AI go, and what does it mean for the future of human roles in this profession? While we don’t face an existential crisis today, it’s a question worth pondering.

Conclusion: A Balance Between AI and Human Expertise

AI is undeniably transforming the field of accounting, improving efficiency in data entry, analysis, reconciliation, and compliance. However, there remains a significant role for human professionals in ensuring accuracy, forming conclusions, and managing complex tasks that require in-depth understanding.

The future will likely see a hybrid model where AI handles the technical, repetitive work while experienced professionals focus on higher-level decision-making and advisory roles. AI may raise the bar, but it will not replace human judgment anytime soon; however, I am fearful it might sometime in the distant future, considering the economic rewards associated with the advancement of AI (and the recent drama at Open AI that is making rounds).

Views express are personal.