In today’s world, it is no longer an option to overlook the rise of AI in accounting and the mounting capabilities of automated technology and cloud-based software.
With our Accounting Talent Index also revealing chronic staff shortages within the accountancy profession, with almost one in two (45%) of firms being “severely” or “significantly” affected by skills shortages, more and more of them will likely be turning to automated solutions to bridge the gap and maintain outputs and productivity.
We are seeing rising numbers of accounting professionals embrace the opportunities AI can bring to the industry. Insights from the Thomson Reuters Institute’s 2024 Generative AI in Professional Services report found that almost one in four (23%) of respondents were already using or open to using GenAI tools, while 30% of tax and accounting firms are in the “consideration” phase.
The question we need to consider is the extent to which of the benefits are real, or merely hype from a tech industry anxious to sell its shiny new AI toys.
The fact is that AI has been used in accounting for many years. Tools like Dext and AutoEntry have been using it to code data from receipts and invoices. Xero have been using it for streamlining bank reconciliations. Robotic Process Automation tools have been used to move data from one system to another. The productivity improvements from these have certainly delivered the benefits of AI in accounting to any firm using these technologies. The question is – how else can we use AI in accounting?
To date, the main space we are seeing our customers benefit from AI in is in communication. Many are using tools that transcribe meetings alongside tools that summarise transcriptions to generate minutes. Some are using GenAI to compose routine emails to, for example, chase clients for missing information. There is a very clear productivity improvement from using AI in this way, however these are incremental changes that will likely fall-foul of the time-based billing models still widely prevalent in the accounting industry.
We have also seen many firms using AI during Audits, using tools like Inflo and CaseWare Audit. The audit partners we have spoken to suggest that the use of AI is only adding to the expectations of audit with no commensurate increase in the fees chargeable.
The third area we are beginning to see use of AI is in generation of insights about accounting data. Xero’s AI strategy mentions this as an explicit target, and we expect other vendors to follow suit.
All of these are incremental improvements to accounting productivity due to AI– not the obliteration of the accounting profession that many outside the profession are predicting. Our view is that these outsiders do not know the industry very well.
So, can AI do accounting? For the most part, the preparation of a set of accounts can be automated if the books are accurate. We are still years away from bookkeeping processes being fully automated; or that to happen AI tools need context. For example, how would an AI tool know if a restaurant receipt was travel or entertainment without some input from a person? Beyond that, there are a considerable number of business owners who do not yet use cloud accounting software and still use a lot of paper receipts – it will take many years for this transition to conclude
So, if we define accounting as merely the preparation of a set of accounts, the answer is yes, AI can do accounting, but not yet. However, that is a very narrow definition of the role of a professional accountant.
Advancetrack Managing Director, Vipul Sheth, comments on the use of AI:
“It must be acknowledged that AI unlocks more time for accounting professionals to focus on essential strategic thinking and problem solving, which we all know is where clients identify the best value.
“However, what must also be acknowledged is the role that accountants play in inspiring trust and promoting integrity within the profession. Through our significant experience and expertise, we can calm anxieties, communicate complexities and build long-lasting professional relationships that can evolve alongside changes to technologies and software solutions.
“The accountant’s role has been, for some time now, evolving towards a more strategic and analytical position, and we can absolutely utilise AI to strengthen this proposition. I would always recommend proceeding with caution when it comes to leveraging these tools in the right way.”
The debate on the use of AI in accounting needs to move to being about TRUST. How do professional accountants assure statutory accounts that AI tools have had a hand in preparing? How do professional accountants support their clients in using AI within their businesses, especially their finance processes, thereby living their role of trusted advisor.
AI in accounting is a complex topic and one which will evolve over time. From our perspective there are three main benefits of using AI in accounting.
Along the way, Advancetrack can support the transition from where you are as a firm now to being focused on assurance and advisory. You could consider our team-based podsourcing® solution, which seamlessly integrates skilled offshore professionals into your practice while you focus on services that add more value to your firm and help mitigate problems attracting talent. Of course, we at Advancetrack are looking at how AI can be used in our business and how we can support our customers in a future with considerable use of AI in accounting.
