The rise of Gen AI has impacted various industries with its capability to present information within seconds and also help humans at work to use that to get better results in less time.
The rise of AI has also impacted the field of accounting, and as per the profession veterans, it comes with a light of hope and presents some signs of worry. In the initial phase of a new technology, the supports create a utopian world and how the technology will change everything. At the same time, the naysayers are the ones who paint a dystopian future, which will be there in place due to the rise of such technologies.
Artificial Intelligence has its fair share of criticism where it got condemned, and many practitioners pose a more profound risk of data threat. However, one fundamental fact about technology is that it brings change, and the ones who adapt to it can benefit from the new technology and take the gains from it.
How AI Evolved Accounting
In the accounting field, AI has already made an impact that fundamentally changes how a task gets done. With the rise of its usage, accountants benefit from it by using the technology at every step of their work.
- Use in Data Entry and Bookkeeping
Accounting work begins with data entry, the simplest yet time-consuming task. Users face errors through manual processing for financial transactions, invoices, and receipts since the task becomes repetitive. “Optical Character Recognition” (OCR) and “Natural Language Processing” (NLP) in AI help accountants extract information from data and help in the work of maintaining documents and putting them in order.
Accounting software tools like QuickBooks and Xero are now enabled with AI, and they can draw the company's transactions from the bank accounts and get those categorized, removing the manual work. Automating the manual workload through this system reduces the human involvement needed for standard accounting duties.
- Involvement in the Auditing Process
In the process of auditing, the AI system can help the accountants find the anomalies in an organization's finances and also help the person on the job get a grasp on the vast amount of paperwork they need. Previously, accounting work used to take months, and now the entire thing can be done in a week for that same organization.
AI uses machine learning algorithms that effectively analyze financial data, create a dataset for each group, and help in predictive analysis by understanding the trend. Forensic analysis also helps detect fraud in accounting methods and is a helpful tool for finding financial misreporting quickly.
As per the report of KPMG, the use of “AI-enabled financial reporting” will grow significantly. The accountants need to have the additional knowledge of analyzing data and a knowledge of prompt engineering to get the work done through an AI.
- A Catalyst in Tax Preparation
AI has a significant role to play even in the compliance standard of the organization as it can optimize the tax deductions and credits that a company or an individual professional can get. Since an AI tool has the knowledge of the library regarding every other thing, then in that case, it can suggest the probable solutions that an accountant needs to find by analyzing a business.
Today, information about tax files can be gathered by the accountant, and through that, one can ensure the accuracy is there in the tax filings. It also gets used to proofread the tax file, reducing the chances of human errors and thus marginalizing the chance of receiving a penalty notice.
A firm can use software like Booke, which is beneficial for integrating the scanned receipts and then putting them as data in the accounting system automatically. It saves time, and in the tax preparation process, one can get the list of all transactions in a single place.
More Profound Threats of AI in Accounting
The risks exist regarding AI in accounting work; therefore, human oversight is needed while presenting the final work.
- A Chance for Bias
Generative AI is useful for solving most data-related work, but one of its core problems is that it hallucinates. One of the big accountant firms, Delloite, faces the bias and errors that AI produces unintentionally. These mistakes can lead to financial inaccuracy, creating a skewed and biased report.
- A Threat to Data Integrity and Security
Accounting applications powered by AI depend entirely on available data because errors within the data will produce damaging results. AI systems develop harmful results when they receive corrupt, improper, or deficient data inputs. An ethical problem emerges from the need to guarantee that AI uses solely valid data to make decisions.
Clear evidence of financial information requires high levels of security throughout the accounting process. The overuse of AI creates a situation where the company or an individual remains exposed by an accountant as their data being shared with a party other than the two partners who have entered into the confedential agreement.
The lack of secure financial data handling through AI creates significant problems for organizations and their clients, which leads to questions about AI's suitability as an information security tool.
- Job Displacement for Entry-Level
The immediate job loss is not visible in accounting as it’s a profession of high value and trust. Here, the presence of humans is essential for clients to remain comfortable with their crucial financial data. Firms like SRJ Chartered Professional Accountants and other prominent accounting organizations have agreed to use AI as employee leverage.
However, the overall overview of the industry is that as AI tools get more advanced, entry-level jobs can be at risk, as entry-level work can be done through AI. As per Forbes, AI will be more capable of doing routine tasks with more accuracy, thus reducing the employment pipeline in the industry in the near term.
It creates an ethical dilemma of using AI for advancement and the consequences of it on the stakeholders of the industry. As the competition in the industry progresses, the companies will adopt AI, and regulation and ethical usage of the tool will become the parameter that can protect clients and the industry stakeholders from potential harm.
