The Impact of Generative AI on Accounting at Midmarket Firms: Evolving Skillsets and Business Processes
Christopher Day MSF, PMP, CSM, LSSBB
Chief Innovation Officer at HHM CPAs & JD Candidate at Cleveland State University
Generative AI (Gen AI) is transforming industries, and the accounting field is no exception. Midmarket firms, which often straddle the line between small business agility and large enterprise complexity, are finding generative AI technologies particularly useful for increasing operational efficiency, improving decision-making, and redefining employee roles. These firms are starting to see AI not just as a tool for automation but as a catalyst for skillset transformation.
Shifting from Routine Tasks to Analytical Thinking
Historically, accountants spent a significant portion of their time on repetitive and manual tasks, such as data entry, reconciling accounts, and generating financial reports. With Gen AI, many of these activities can now be fully automated, allowing accountants to spend more time on higher-level tasks that require human insight and decision-making. For example, platforms using Gen AI can analyze vast datasets, identify patterns, and flag anomalies in real-time—tasks that once required hours or days of manual effort. This shift is transforming accountants into strategic advisors rather than just record keepers.
Employees are now expected to have a blend of accounting expertise and technical proficiency. The ability to interpret AI-generated insights, apply them to complex business problems, and communicate findings effectively is becoming a critical skill. Accountants need to understand how AI models work to ensure compliance with auditing standards and to mitigate the risks of relying on algorithm-based decisions.
Enhanced Forecasting and Strategic Planning
Generative AI is making it easier for midmarket firms to perform predictive analytics and scenario planning. By feeding historical financial data into AI models, firms can generate more accurate forecasts and better assess potential risks and opportunities. As a result, accountants must now be adept at interpreting these forecasts and integrating them into business strategy. This shift underscores the need for stronger business acumen alongside traditional accounting skills.
Midmarket firms, in particular, benefit from AI’s ability to level the playing field, providing access to sophisticated analytics that were once the preserve of larger enterprises. AI-driven forecasting tools allow midmarket firms to quickly adapt to market changes, helping them stay competitive in an increasingly fast-paced business environment.
Upskilling: The New Priority for Midmarket Accountants
As Gen AI takes on a greater role in accounting, upskilling has become a priority. Employees are being trained not just on how to use AI tools but also on how to make sense of the data produced by them. Firms are investing in training programs focused on data literacy, machine learning basics, and AI ethics to ensure that their workforce remains relevant in a rapidly evolving landscape.
A report from the World Economic Forum (2020) predicts that automation and AI will displace 85 million jobs globally by 2025 but will also create 97 million new roles that require a higher level of analytical thinking, problem-solving, and technical proficiency. This is particularly relevant to midmarket accounting firms, which are seeking to harness the power of AI while reskilling their workforce to manage these new technologies effectively .
Gen AI in Auditing: Increasing Trust and Reducing Fraud
AI-powered tools can enhance the auditing process by scanning for inconsistencies and red flags that might otherwise go unnoticed in manual audits. Midmarket firms are using Gen AI to comb through massive datasets in real-time, cross-referencing transactions, and identifying irregularities more efficiently than a human ever could. This capability not only improves accuracy but also reduces the risk of fraud.
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For instance, AI-based anomaly detection can automatically flag suspicious activities, such as unusual spending patterns or discrepancies in financial reports. This shifts the accountant’s role from one of manual verification to higher-level oversight, making fraud detection more proactive and reliable.
AI as a Competitive Differentiator
For midmarket firms, Gen AI presents an opportunity to differentiate themselves in a competitive market. Those that embrace AI-driven efficiencies can take on more clients, improve service offerings, and provide faster turnaround times. In this context, AI is not just a tool for automation but also a way to enhance client relationships.
By leveraging AI, midmarket firms can offer more personalized financial advice and services based on data-driven insights. This is particularly important in industries where firms need to respond quickly to regulatory changes or client-specific needs. As Gen AI becomes more prevalent, firms that lag in adoption risk falling behind.
Ethical and Compliance Considerations
While Gen AI offers significant advantages, it also raises ethical and compliance concerns. For midmarket accounting firms, ensuring that AI tools comply with regulations such as the Sarbanes-Oxley Act and the General Data Protection Regulation (GDPR) is crucial. Accountants must understand the limitations of AI algorithms, including biases in data sets and the potential for incorrect conclusions, to ensure responsible usage.
Accountants are also tasked with ensuring that AI-generated financial reports meet the necessary standards for accuracy and transparency. This requires a foundational understanding of how AI models are built and how they arrive at specific outcomes, so accountants can validate the outputs in line with auditing standards.
Conclusion
Generative AI is redefining the accounting landscape for midmarket firms. It’s shifting the focus from routine, manual tasks to higher-level, value-adding activities like strategic forecasting, auditing, and fraud detection. However, as AI continues to permeate the accounting profession, it also demands that employees acquire new skills in data interpretation, AI ethics, and business strategy. For midmarket firms that successfully adapt to this new reality, AI will not only be a tool for operational efficiency but a key driver of growth and innovation.
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