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How Artificial Intelligence is Changing Accounting

It’s an often-used plot: a being with artificial intelligence turns evil and tries to take over the world. From Metropolis (1927) to Avengers: Age of Ultron (2015), artificial intelligence (AI) in the form of robots and computer programs has become a stock villain in fiction.

Based on these stories, it’s easy to see how people could fear AI. In reality, it’s here to help. Many organizations have begun using AI to streamline processes and get an advantage over the competition. One industry where the application of AI has great potential is accounting.

How Can AI Change Accounting?

According to a 2017 study conducted by the Boston Consulting Group surveying 3,000 executives, managers and analysts, 83% of respondents considered AI a priority for their business and strategy, while 63% feel their company will start using AI within the next five years to reduce costs.

Larger firms have made investments in AI technology, including an AI that can assist in auditing processes and estimates, according to the Journal of Accountancy. There may be some marginal job loss when AI is widely implemented, but it shouldn’t affect employment too much – in fact, the AI processes will need accountants to supervise the technology and make sure it’s running correctly.

Deloitte’s chief audit innovation officer Jon Raphael said to the Journal, “We’re at a real pivot point in terms of being able to wrangle and use data in ways we’ve never even contemplated before.”

Of course, this is where people’s fears of AI come in – the fear of the unknown. AI isn’t meant to replace humans – it’s intended to make our jobs easier and give us a chance to focus on the less mundane tasks.

AI is mostly being used to process immense volumes of data at rapid speeds, like how spreadsheet programs work now, said Tom Davenport, a Babson College professor, to the Journal of Accountancy. Davenport also said that the calculations that need more detail and analysis will still be completed by humans.

AI can also help with auditing, which gives auditors an easier time of looking at and interpreting data results. It’s able to examine keywords and take that information into account while creating risk assessments and other reports. While processing reports, it can send the questionable issues to a human for further attention.

Another example of how AI can be applied in accounting is the app Pegg, which integrates with the popular office messaging system Slack. It can create invoices and answer questions about projections and accounts. In an interview with Forbes, creator of Pegg Kriti Sharma said that most business people use these messaging apps, and “we aim to bridge the gap between these apps and work, rendering accounting invisible to the end user and making running a business as simple as sending a text.”

How Can Accountants Prepare for The Advent of AI?

In the Boston Consulting Group study, nearly a third of respondents said they feared that AI would do some of their current tasks. Having a fear of AI won’t help accountants in the long run – businesses will implement processes that will save them the most money. Instead, accountants should work to educate themselves on AI best practices and how they can integrate it into their daily tasks. Ways to learn about AI include:

  • Attending seminars
  • Working on specialized projects
  • Taking courses on AI
  • Studying AI’s influence through self-directed learning

It’s also important to be open to change. The business world is constantly growing and evolving, and if someone isn’t demonstrating flexibility, they may not be seen as a team player. Accountants will need to develop hard skills with technology and data analysis, but they will also need to work on soft skills like critical thinking and adaptability, according to a report from The Institute of Chartered Accountants in England and Wales (ICAEW).

Working with AI for Success

ICAEW makes the point that AI and humans do not reach decisions in the same way. Humans decide things through intuition and reasoning, whereas machines use data, patterns and consistency. Humans can take the analysis presented by AI and use our intuition and reasoning to make the most educated decision possible.

AI is powerful, but still has its limits. It only can analyze data: it can’t recognize bias or prejudice in a system. Other times, an issue may need an ethical assessment or recommendations that can’t be reached just from examining data. When used correctly, AI and human intelligence can work to balance each other’s weaknesses, creating a streamlined and efficient process to help businesses move forward.

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