• Thu. May 23rd, 2024

Accounting Profession Swiftly Adopting – San Diego Business Journal

SAN DIEGO COUNTY – Adoption of AI, artificial intelligence, in business has been nearly as swift as the technology’s computational speed itself. In a data- and numbers-rich profession like accounting, AI is quickly becoming a useful tool.

Scott Rapp
Senior Manager, Tax Technology Consulting
Deloitte Tax LLP

“We’re already leveraging [AI for] a lot of the automatic items like requirements document generation, user guide generation, and programming / code generation. These tools make us more efficient and make each hour we spend a bit more valuable to our clients,” said Deloitte Tax LLP Senior Manager Tax Technology Consulting Scott Rapp.
Rapp added that over the next few years, AI will impact professionals in two broad ways.
The first, he said, will come from the rollout of AI-enabled personal productivity tools from companies like Microsoft.
“These will impact the way we work and make us more efficient. It will help us write code, make meeting minutes and summaries, extract to-dos from meetings, synthesize requirements for accounting system implementations, and generally promote productivity as it helps us track due dates, reminders, follow-ups, and other Outlook enhancements,” he said. “These toolsets will be ubiquitous and almost all companies and employees will leverage these toolsets.”
The other broad category, Rapp sees is a more targeted implementation of AI.
“A much smaller group of leading-edge adopters will find use cases like item categorization or PDF scanning and generation integrations for things like purchase order to invoice reconciliations or exemption certificate generation and other repeatable tasks done by accountants and clerks. These one-off use cases will require more concerted effort and investment from companies to achieve,” he said.

Nick Hatton
Audit Manager

AI Shifting Roles in Accounting

EisnerAmper Audit Manager Nick Hatton said that AI has “many benefits accountants can leverage” and that accountants are already benefiting from AI automating tasks such as data entry.
“This allows us to create more time for our staff to start thinking critically about advising clients, rather than performing repetitive tasks,” he said, while also pointing out that there are current limitations to what AI can do in assisting accountants.
“It remains to be seen whether it can generate insights,” he said. “Furthermore, I wouldn’t trust it to provide strategic advice to me or my clients without careful review from an experienced professional.”
That need to review certain tasks performed by AI is the basis of Deloitte’s Digital Artifact Generation/Validation method used to determine appropriate use cases for AI. According to the Deloitte AI Institute, the method has two elements to consider: “the human effort required to complete a task without Generative AI; and the necessary effort to validate or fact check the output from the Generative AI.” So, if a task requires effort to execute but is easy to validate, it might be a good use case for AI.
Because of these limitations and the need to validate AI output, Hatton doesn’t predict a future where AI replaces accountants. Instead, he sees the role of AI as more an assistant to accountants that enhances capabilities.
“By leveraging AI, we can elevate new staff more quickly to get them doing the high-level and value-added aspects of the job,” he said.
Rapp said he sees a shift in accounting’s human workforce, with certain roles increasing for people “and others being removed in favor of an AI counterpart.”
“For example, a clerk that performs data entry based on PDFs with PO numbers and invoices will be replaced by AI, however, we’ll need people who understand AI to implement and maintain that point solution,” he added. “Also, the complexity of reporting to comply with global tax and climate regulations will dramatically increase the effort a multinational enterprise’s tax, accounting, and finance functions which will require more sophisticated technology and highly skilled individuals to work with that technology.”
To prepare for this shift in job roles, Rapp recommends accountants start developing skillsets around AI.
“You don’t have to become a data scientist to meaningfully gain skills around how to use AI and become better at working with our new virtual counterparts,” he said.

Security Concerns and Regulations

Working with AI virtual counterparts does have its risks.
“Data security is always a challenge and can never be taken lightly,” Rapp said. “In the same way that tools like Excel Macros can be used for good or malice, AI gives bad actors a whole new toolset to create malicious software, and even identify vulnerabilities in non-AI environments.”
In addition to bad actors, Rapp said that even “well-intending accounting professionals” through ignorance of the technology could inadvertently expose data trying to leverage AI, such as putting forecast data into an AI toolset that hasn’t been secured.
Hatton said that the business world is currently in the “Wild West” of AI adoption and recommends that accounting firms take time to develop AI policies and procedures before adopting AI solutions.
In addition to security concerns, AI tools for accounting firms also need to be compliant with regulations and tax codes, which are updated and revised often and can impact AI effectiveness.
“Much can change based on government regulation and tax code changes,” Hatton said. “It will take time to develop standards and guidelines that provide a roadmap for this technology’s use across the industry.”
Rapp sees the biggest impact related to government and AI is the way the IRS – or any other government tax agency – will leverage the technology to empower tax audits and enforcement of both individuals and corporations.
“The IRS — and state regulators / other countries — have always had too few resources to analyze the volume of returns it receives, and when AI does the analysis instead of humans in the next couple of years, these regulators will find more inconsistencies and automate assessments,” he said. “We’ll see more AI-initiated conversations in which your auditor will be an AI chatbot requesting details of a certain deduction you took, and you’ll chat with that ‘audit bot’ and provide it attachments etc. in addition to dealing with human auditors.”


AI on AI in Accounting

The San Diego Business Journal asked EisnerAmper about the role of artificial intelligence in its practice and the accounting profession at large. In addition to providing answers from EisnerAmper Audit Manager Nick Hatton, the firm also posed the questions to Microsoft’s CoPilot Generative AI Solution. Hatton then commented on the AI response. Most of Hatton’s comments were used in the corresponding “Accounting Profession Swiftly Adopting AI” article. The rest of his replies are included below:

In what capacity do you see AI – in general and specifically generative AI – as the most beneficial in accounting for both accountants and clients?

AI: AI, especially generative AI, can benefit accounting by automating tasks, improving accuracy, generating insights, enhancing customer service, and providing strategic advice.
Hatton: AI has many benefits accountants can leverage, specifically in automating tasks and data entry.

How do you and your team use AI? Describe how it helps your practice and clients:

AI: A team can use AI to automate and improve various aspects of its practice, such as data entry, fraud detection, financial forecasting, pricing analysis, business intelligence, customer service, and strategic planning. This helps teams and their clients save time, money, and effort, as well as enhance performance and competitiveness.

How do government regulations and changes in our complicated tax code affect AI adoption and reliability? How do you see any similar issues with AI in accounting resolving over the next few years?

AI: Government regs and tax code changes can impact AI effectiveness both positively and negatively, requiring collaboration among various stakeholders. Some possible ways to resolve the challenges are developing and implementing standards and guidelines, providing training and education, establishing and enforcing transparency and auditability mechanisms, and fostering a culture of trust and ethics.
Hatton: I mostly agree with AI here.

Do you see a risk that AI will replace some of the human workforce in accounting?

AI: I think AI will not replace human accountants, but rather augment and enhance their capabilities and roles.
Hatton: I absolutely agree with AI here.

Do you worry about security risks with AI? Why?

AI: Yes, because AI systems can be vulnerable to attacks, bias, or unethical use, and can pose threats to data privacy, human rights, and social welfare.
Hatton: Agreed.

Anything else you’d like to mention, or comment on?

AI: AI is not a magic bullet that can solve all the challenges in accounting, but rather a powerful tool that can complement and support accountants in their work. Therefore, it is important to use AI wisely and responsibly, and keep learning and adapting to the changing environment.
Hatton: This is a great summary from AI. Over time, accountants will determine how to best leverage AI for their teams and clients. With AI, you will only get out of it what you put in. Take the time to understand AI now and develop a good roadmap.


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