By Nana Esi Bentumaa BENTUM
In the last quarter of 2022, the launch of ChatGPT by OpenAI ignited the spark that burst the flames of interest and dialogue around the possibilities and implications of Artificial Intelligence (AI).
The discussions rapidly gained momentum, with widespread attention turning toward how AI is reshaping various fields. The accounting industry has not been left out of this transformation conversations. Artificial Intelligence is technology that enables computers and machines to simulate human learning, comprehension, problem solving, decision making, creativity and autonomy.
For centuries, the benchmark for intelligence, especially in problem-solving and decision-making has been attributed to human beings. The emergence of AI as a new participant sharing this center stage has understandably produced discomfort and apprehension among many accounting professionals.
This reaction is natural, given that technology now plays a role in areas once considered uniquely suited for humans. Nevertheless, viewing AI purely as a threat is a misconception.
This article seeks to examine this nuanced perspective by outlining how human know-how and artificial intelligence can co-exist and thrive together.
Benefits of AI
Routine tasks
Accounting processes are plagued with several repetitive and time consuming tasks like data entry, reconciliation of statements and the preparation of reports. These activities, although essential, can be monotonous and prone to human error, especially when performed manually on a large scale. This is where AI comes in.
AI-powered tools can automate the extraction of information from invoices and other financial documents. Rather than requiring accountants to painstakingly enter and categorize each transaction, AI tools can recognize, sort, and upload this data.
Further, advanced AI applications are capable of tracking source documents, cross-referencing them with recorded transactions, and reconciling them across multiple financial statements almost instantly.
By automating such routine activities, AI eliminates the fatigue traditionally associated with accounting work. This creates opportunities for accounting professionals to shift their attention to high value responsibilities that require critical thinking, complex analysis, and sound judgement.
Accuracy
Have you ever encountered a situation where your financial statements did not balance? It’s a scenario most accountants encounter at least once over the course of their careers. Such moments can lead to painstaking reviews of countless entries in search of the root cause of the imbalance. Such issues typically arise from incorrect numbers, mis-posted accounts or overlooked transactions.
These mistakes are often the result of fatigue, time pressure, or simply being human. AI eliminates the inaccuracies that come with human fallibility, reducing the risk of errors, wrong entries and imbalance.
By leveraging AI technology, the risk of making erroneous entries or missing crucial information is reduced, and the likelihood of discrepancies on financial reports declines significantly.
Potential fraud and error detection
AI is able to pick up errors and potential fraud rather quickly. AI analyzes patterns and anomalies within large amounts of data. Modern AI systems can sift through enormous volumes of financial data, scanning for patterns, trends, and unexpected anomalies that may indicate possible deviations.
By leveraging powerful machine learning algorithms, these technologies are trained using extensive historical transactional information. This training enables AI to develop a sophisticated understanding of what typical activity looks like and, importantly, spot deviations that stand out from the norm.
When an anomaly is detected, be it an unusual transaction, an inconsistency in reporting, or a potential misstatement, the AI system flags this for further attention. This means issues that might otherwise go unnoticed in manual reviews can be uncovered quickly, helping organizations respond proactively to risks.
However, while AI excels at pattern recognition and alerting teams to potential issues, the human element remains essential. Accountants and auditors can then exercise professional judgement, drawing on their expertise and knowledge of the facts and circumstances, to determine whether a flagged item truly represents an error, fraudulent activity, or simply an unusual but legitimate event.
Compliance monitoring
Accounting has lots of moving parts which include compliance to laws, regulations and accounting standards. What adds to this challenge is that these laws, regulations and accounting standards evolve continuously, with new updates, amendments, with varying effective dates emerging regularly. This dynamic environment increases the compliance burden on accountants, requiring vigilance to stay up to date in complying with them.
AI could take some of the burden off the shoulders of accountants as it can be used to analyze regulatory texts, stay current with changing requirements, and implement relevant updates within accounting processes.
For instance, AI-driven solutions can be programmed to assist in the preparation and filing of Value Added Tax (VAT) returns, Corporate Income Tax (CIT) returns, and Withholding Tax (WHT) returns, among many other recurring compliance tasks. These tools can extract needed information from financial records, apply the correct tax treatments based on current legislation, and generate accurate filings.
Accountants can retain an oversight role by reviewing AI-generated work, applying professional skepticism and expertise to ensure compliance and identify any nuances that technology might overlook.
Cost Saving
Discussions focused on improving the bottom line are a constant feature in boardrooms. Chief Financial Officers (CFOs) and their teams are always in a quest to identify, implement, and optimize cost-saving strategies that drive greater profitability for their organizations.
The adoption of artificial intelligence within accounting workflows is increasingly proving to be a key lever for cost reduction. By automating routine data entry, reconciliation, compliance reporting, and other repetitive tasks, AI enables accounting departments to function with fewer staff. This leads to significant reductions in personnel costs and non-compliance cost and thus allowing resources to be redeployed toward more strategic, value-added activities.
Enhanced productivity
Accountants have long carried the reputation of being workaholics; working late into the night, crunching numbers, poring over reports, and racing against the clock to meet demanding deadlines. Professionals usually leave little room for rest, with much of the workload revolving around repetitive, detail-oriented tasks that can contribute to fatigue and even burnout over time.
The rise of artificial intelligence in accounting is set to radically reshape this dynamic. As AI assumes responsibility for many of the routine, labor-intensive activities, accountants gain the “freedom” to prioritize the aspects of their work that require genuine expertise, and judgement. Accounting with AI brings with it a new era for the profession where mental stimulation and well-being go hand in hand enabling professionals to enjoy a more balanced personal and professional life.
Challenges
Despite the benefits that come with leveraging AI tools, not all accountants are eager to adopt and adapt to AI.
Availability of AI talents
AI is still “new” to many in spite of it being topical for almost three years now . Despite the growing hype around AI tools, many talents are still playing the wait game in familiarizing themselves with the use of AI. This has created scarcity in the availability of AI talents.
Rather than relying on external hires to fill AI-related skill gaps, organizations can achieve substantial long-term benefits by investing in their current workforce. This can be done by providing ongoing training and targeted development programs that focus on AI tools and applications.
Developing existing talent is a cost-effective strategy as it taps into deep institutional knowledge of current employees and equips them with new technological competencies. Organizations can enhance productivity, drive innovation, and avoid the substantial costs associated with recruiting and onboarding new hires. Over time, this proactive approach would ensure a smoother and more successful transformation where teams are empowered to fully realize the potential that AI brings to the table.
Upfront costs
Developing custom artificial intelligence tools and applications demand significant financial investment. To build proprietary solutions, organizations often need to allocate resources toward recruiting specialized talent, setting up robust data infrastructure, and purchasing high-performance computing equipment. These investments can add up quickly, sometimes stretching budgets beyond what’s feasible for many entities.
Accountants can start the adaptation of AI tools by initially patronizing third party cloud based solutions. Several cloud-based AI solutions are designed to be intuitive and adaptable, allowing accountants to experiment with and tailor their tools as operational needs evolve. This flexibility can help contain costs. It can also be seen as a risk-mitigation strategy, letting organizations test the waters and assess impact without subjecting themselves to the full range of challenges that come with deploying custom AI infrastructure.
Data security
Accounting involves handling sensitive personal and business data. This includes confidential client information, payroll records, tax identifiers, and other personal information that are fundamental to accurate record-keeping and regulatory compliance. When organizations use AI tools to process, store, and analyze these datasets, unique security risks arise, especially if data management practices are not robust. AI systems sometimes introduce vulnerabilities due to factors such as centralized storage and third-party integrations.
To address these risks proactively, accountants should collaborate closely with IT professionals and cybersecurity specialists within their organizations. By working together, they can identify potential vulnerabilities, evaluate AI vendor practices, and implement comprehensive data security protocols tailored to the complexity of accounting workflows.
Conclusion
Over the centuries, the accounting profession has continuously evolved through the introduction of tools designed to streamline and improve daily operations. Starting with early devices like the abacus, moving through the adoption of columnar books and ledger systems, and progressing to the use of punched cards, calculators, and eventually computers, each generation of technology has brought significant enhancements. These tools have not only boosted accuracy but have also allowed accountants to manage ever-larger volumes of financial information with greater ease.
Today, artificial intelligence is poised to follow in the footsteps of these transformational technologies. By automating complex tasks, analyzing large datasets rapidly, and reducing manual workloads, AI is making accounting far less strenuous and much more insightful. Rather than replacing past advancements, AI builds upon them, offering the potential to unlock new efficiencies and capabilities for both individuals and organizations within the industry.
As Mike Bechtel, Chief Futurist of Deloitte, insightfully shared on the IMpact podcast, “AI is not a revolution but yet another evolution of technology.” This perspective highlights that artificial intelligence should be seen not as a disruptive force upending tradition, but rather as the next natural stage in the ongoing journey of technological progress within accounting. Embracing AI means welcoming a future where tools are continuously refined to help professionals work smarter, not harder.
AI is set to transform the accounting industry by handling routine and time consuming chores. This allows accounting professionals to dedicate their expertise toward more impactful endeavors like strategic planning, financial trends interpretation and data driven judgement calls tailored to the needs of stakeholders.
Adapting to change can be challenging, but it’s important to welcome it. With technology evolving quickly, it’s best to let AI-driven advancements work for you, not simply happen to you. Instead of viewing AI as a rival, consider it a partner. Approach this transformation within the Accounting Industry with the perspective of “Humans and AI working together” instead of “Humans versus AI.”
>>>the writer is an award-winning ACCA Fellow, CPA (US) and ICA (Ghana) certified accountant. She can be reached via LinkedIn Nana Esi Bentumaa Bentum LLB, CPA, FCCA
