By Avneet Narang
Before exploring the many ways that artificial intelligence, or AI, is disrupting the accounting profession, it will be relevant to see what it is all about.
AI is the ability of software and machines to display or imitate a sense of cognitive intelligence, which while promising to positively impact many sectors also raises great concerns about moral issues. A machine developed to think, learn and react like human beings is good for an hour of a sci-fi movie with a not too happy ending, but in real life, these aspects are being harnessed to bring about revolutionary changes in technology. AI has the potential and promises to be a disruptor as potent — or maybe more — than cloud computing.
AI can be considered to be a great performance enhancement business tool, especially in areas that require a high level of technical precision and analytical judgments like accounting. Niche areas that hold great promise to optimize operational efficiencies through AI are sales and marketing, research and development, customer service and logistics. In all these areas, highly skilled and technically qualified personnel are required now.
This is exactly what AI threatens to replace, bringing about a paradigm of services that can contribute to investor profits with assured increase in ROI. It is somewhat similar to cloud computing that took the world by storm a few years ago. At that time, accountants had to readjust to the new technology and had to rethink their profiles and services. The time has come again for them to do the same, and AI poses a threat for those who cannot keep up with the time and this technology.
How then can AI radically impact the accounting profession? Can it take over the role of an accountant or will it simply complement their functions to ensure greater efficiencies? Here are a few points to consider.
Automating Tedious Tasks
An accountant’s task today starts with outdated methodologies of data analysis and generation of reports. In spite of numerous advanced and cutting edge accounting software available to the accountant for quick processing of data centric tasks of accounting and tax and auditing, the human touch cannot be totally dispensed with. Accountants still have to wade through verifying and reviewing data and reports in traditional formats.
AI promises to turn all of these functions on its head. AI-powered automation will do away with such cumbersome tasks like data analysis and transaction coding. With free time on their hands, accountants will increasingly play the role of advisors and will focus on high value work. The adverse effect is that AI and its integration with the accounting profession can lead to job losses over the next couple of decades.
AI-based machines will be able to take over many tasks hitherto linked to accountants and HR personnel. Most important is the ability to control the functions of statutory compliance of various rules and regulations. It can also evaluate employee performance which in turn can influence HR decision making.
Many consider this to be a frightening aspect of invasion of human privacy since analysis of lifestyle patterns and human behavior will be made by an “intelligent” machine. The question then is can these machines strike a balance between stark data analysis and a deeper human like empathy while arriving at decisions.
Accountants are individuals who have a key role to play in any business and take considerable responsibilities on financial aspects. Even though they are highly experienced and skilled in their trade, they are human beings who can make mistakes, rare though it might be. This might have a damaging effect on the business.
Computers with sophisticated AI compatibility, on the other hand, can take over financial roles and execute jobs accurately and with precision, thus becoming better fiduciaries than their human counterparts. Hence public trust funds are slowly introducing AI-based machines to keep a control over funds including monitoring and decision making roles.
More Accounting Automation Avenues
There is no doubt that AI — if implemented properly — will have a great impact on overall functioning of any business including a rise in productivity and resource management. Presently, accountants are using various software tools and business process management tools to arrive at better-informed decisions. As the technology driving AI improves, more avenues will open up to accountants to automate functions in their profession that will further optimize business processes.
“Intelligent” investment managers and automated wealth managers can offer precise and accurate financial advice, eliminating the need for full time advisors and financial analysts. This has been a source of much debate amongst the global investment community. In fact, many large international hedge funds have already opted for AI-based trading algorithms that have completely taken the human element out of market forecasts and can predict trends based on historical and statistical data. However, if every investor were to use AI systems, it will be to the detriment of the entire market as it will significantly affect cash flows and policy making.
Negative Impact of AI
There is a school of thought that predicts that all might not be well in future in implementing AI-based technologies. The cognitive abilities that are sought to be harnessed for better accounting and other processes might at some time be able to generate autonomous knowledge and data. With no control or monitoring, the very programming codes and algorithms structured for optimizing system efficiencies might lead to a “runaway effect” of negative situations. This is a position where the very issues that are being sought to be streamlined may later do more harm than good. At present, the situation where AI can be used to control and mitigate negative effects is quite far off.
The future of AI can be said to be a scenario where machines will ultimately compete with human beings on various intellectual planes. However today, it has made great advancements and has already automated/eliminated jobs in the legal, banking and other industries. Accounting of course has always absorbed new technologies and found ways to derive benefits from it. AI should be no exception. It will definitely not put accountants out of work but will help them derive more business value and efficiency from it.
Photo credit: Technology background representing artificial intelligence from whiteMocca/Shutterstock