Examining The Future of AI in Accounting

The speed at which AI is being introduced into our everyday lives is head spinning! Recent discussions of using AI in the accounting field are all over the map. Some say it’s a huge time saver, while others say it’s potentially disastrous (some will even spout both opinions in the same sentence). Since the industry seems so conflicted about this hot topic, let’s explore the potential advantages and possible pitfalls of using AI in accounting. 

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The Potential
One of my biggest challenges in working with clients arises when there’s a mismatch between what I’m brought in to do and what I actually end up doing. I am brought in to add value in terms of financial analysis and forward-looking metrics so that the executive team can make informed business decisions. Many times, though, because accounting teams are run extremely light, I find that I am THE accounting department. This means that I am stuck in the weeds, doing data entry that is neither cost-effective nor insightful.

Similarly, a significant portion, if not the majority, of your accounting team’s efforts are spent on data entry functions. The continuing growth of AI in the accounting industry could be an incredibly powerful tool for your accounting team in that it will increasingly perform back-office functions like data entry, real-time reconciliations (zero-day close, anyone?), and even higher-level functions like payables and receivables processing and fraud detection.

With the ranks of accountants dwindling and job satisfaction a real issue for accounting staff, using AI to get your team out of the weeds so they can add more financial value could be the differentiator that you need to:

• Attract top staff.
• Lower turnover.
• Keep your accounting functions operating smoothly.

This is important because one of the biggest disruptions to a company is the churn in accounting departments.

George Fuechsel, a programmer for IBM, coined the term “garbage in, garbage out.” I hear this all the time in the accounting field as well. Inaccuracies in data entry are a significant waste of team resources, from the time spent entering data (incorrectly) and then the even more significant amount of effort to investigate the inaccuracy and correct the data. Having most of these functions handled by AI could greatly reduce mistakes and help to maximize productivity on your accounting team.

Another potential advantage is the scalability of AI. One of the limitations on growth can many times be your accounting staff – they only have so much time in the day and you either burn them out or things start to get missed (or, as mentioned above, they have no time to actually analyze the financials). AI has an almost limitless ability to scale, which could allow your accounting team the ability to operate efficiently and not be a barrier to growth.

The Possible Pitfalls
Any discussion of the advantages of AI to accounting is not complete without talking about the potential pitfalls as well. This is a smaller list, but just as consequential. As we have seen in the announcements and technology discussions, AI can make mistakes and, even worse, make things up. This is problematic for accounting, to say the least!

Steps must be taken to ensure data integrity, accurate financial reporting, and dependability in analysis and recommendations - this is where your accounting team comes in and why they aren’t going anywhere anytime soon. We will need humans to oversee all this great automation and to validate the information that AI is producing. We will need to establish cybersecurity measures to protect data and ensure that privacy is protected. We will need to find a way to ring-fence the data that AI is using and set up protocols where AI will constantly cross-check itself and validate the data from the company’s financial dataset.
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In a Nutshell
Here's a nice summary on AI in accounting from ChatGPT itself:

While AI offers tremendous potential to revolutionize the accounting industry by improving efficiency, accuracy, and decision-making capabilities, its implementation requires careful consideration of potential risks and challenges. By addressing these challenges proactively and leveraging AI technology responsibly, accounting firms can harness its transformative power to drive innovation and deliver greater value to clients in the digital age.

The Path Forward
AI is coming for us whether we want it or not and is already embedded in many programs that we use every day. The good news is that there is an arms race by companies to implement AI for competitive advantage, which should help every industry it touches, including the accounting field. AI is being embedded more and more in the accounting systems and platforms that we already have. Companies like Intuit (QuickBooks), NetSuite and Sage are vigorously competing and are integrating AI into their software at every opportunity.

As accounting professionals, I believe we will grow and adapt as new functions continue to be introduced. As I said earlier, your accounting team isn’t going anywhere anytime soon, but they better be ready for the coming wave of automation and be open to learning how to navigate this new, higher-level world of accounting!

When you need an experienced consulting accountant to lean on, please reach out to us! We have a team of highly qualified part-time accountants that can help you get the most out of the new AI tools and resources available to you. Our expert team can provide as much or as little help as you need either remotely or on-site to keep your bookkeeping and accounting operations running optimally. Contact us to find out more!

About the Author
Mark D. Emerson – Consultant with The ASP Team

​Mark is an accomplished financial executive with broad experience in accounting, finance, HR, and operations. He has an entrepreneurial background with an all hands on deck mentality that adds value and produces results.  With a strong ability to present high level analysis to executive teams and articulate complex financial concepts to help drive success, he builds effective teams and establishes strong relationships with banking, audit, and investor communities.​
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Mark holds a Bachelor of Science degree in Political Science from Santa Clara University, and a Master of Business Administration from the University of Washington.

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