How Artificial Intelligence (AI) is reshaping the accounting industry

It has been estimated that by 2025, the global AI market is expected to be almost $60 billion; in 2016 it was $1.4 billion. 

It is obvious with stats like this that the use of Artificial Intelligence (AI) is increasing exponentially. Of course, this is going to have some major effects on the accounting industry, but how exactly? 

The world of technology is constantly evolving and shifting. This blog will investigate how AI is reshaping accountancy and how businesses (and accountants) can benefit from these advances. 

What do we mean by artificial intelligence? 

Artificial intelligence is such a buzz word. What does it mean exactly? 

Put simply, artificial intelligence is the simulation of human intelligence by a machine. There are many processes AI can currently carry out. AI applications include expert systems (simulating the judgment and behaviour of a human), speech recognition (like Alexa and Google Home) and machine vision (the ability of a computer to see, similar in complexity to voice recognition).  

With AI, a lot of processes can now be automated which would previously be manually inputted by us mere mortals. Also, through machine learning, AI can also learn without programming. Pretty cool right? 

However, although AI is very powerful and can carry out basic tasks, it’s not likely to overtake our human intelligence anytime soon. AI needs human intelligence in case of emergency, malfunction, coding, etc. Human intelligence and artificial intelligence need one another. 

Artificial intelligence and accountancy 

Nowadays companies are embracing and welcoming the change. Businesses are implementing the new AI technologies to streamline business operations; one area being accounting. This is because AI provides positive results such as increasing productivity, improved accuracy and reducing costs. 

AI can’t take over the role of an accountant altogether but what it can do is carry out the more menial, time-consuming admin tasks, freeing up accountant’s time to focus on the more strategic, complex accounting jobs e.g. giving strategic advice to help a business grow. 

What business and accounting tasks can AI do? 

What menial business and accounting tasks can AI preform? 

1. Audits

Digitalisation tracks which file was accessed when and by whom, which increases the security of data and the files. Auditors no longer need to trawl file cabinets for documentation as they have access to the digital files. This increases accuracy and efficiency of audits and makes it possible to audit all a firm’s financial transactions, instead of just samples. 

The quicker you get those numbers the better. AI can provide you with data from a huge number of different sources, consolidate, and merge that data together. Speeding up the process and making human error less of a risk.  

2. Procurement 

For many companies, tracking and procurement is filled with paperwork and file formats that may not be compatible with one another. However, AI can be integrated with APIs and unstructured data can be processed. Meaning you and your company can go paperless, save the environment and make procurement easier in the process. AI allows you to easily track changes in price among several suppliers. 

3. Expense management 

Sorting through all those receipts to make sure they are compliant with company policy, takes a lot of time. AI means that you can sit back and let the machine check and review the expenses and warn when there is any sort of breach. 

4. AI chatbots 

With AI, machines can efficiently resolve common queries from users, this may include tasks like when bill reminders, latest account balance, and status on accounts. 

Other jobs AI can handle: 

• VAT returns 
• Bank reconciliations 
• Importing data like receipts from apps 
• Chasing debts 
• Automating billing for clients 

What accounting jobs can’t AI do? 

At first glance it seems AI can pretty much do everything. However, this may be through rose tinted glasses. We’ve already said that AI cannot yet replace human intelligence as there are certain things that are limited with machines. For example: 

• AI cannot decide if an expense is allowable for tax. Some expenses aren’t so black and white and there may be a need for human input to understand the context of the situation. 
• AI cannot consider a client’s source of income from all areas of their life and do tax planning. 
• AI cannot spot a tax coding error if you miss-key an entry.  
• AI cannot decide if an expense from the same supplier is capital or just expenditure etc. 

We wouldn’t recommend ditching you accountant just yet… 

Accuracy of AI needs to be improved 

If an AI system is well configured, it can help eliminate accounting errors that are hard to find. Although AI and machine learning are pretty accurate, there are still a lot of improvements needed. 

Forbes conducted a study, which tested the automation capabilities of 4 popular AI-enabled cloud-accounting solutions available in the market today: 

• OneUp 
• QuickBooks 
• Xero 
• SageOne 

The accuracy of the solutions was ranked against Forbes ‘Accounting Automation Index (AAI)’. This index tracked how good the solutions were at automatically recognising transactions coming in from bank feeds and generating the correct accounting without any user intervention. 

OneUp came top of the pile with an Automation Index rate of 95% (after 5 months of use). QuickBooks was second (77%), Xero (38%) and SageOne (30%). 

This is all very promising, however the accuracy in most of today’s AI solutions needs to be significantly improved. 

Will AI take accounting jobs? 

There is the fear that AI will take jobs. Will AI take accounting jobs? 

“AI needs to be embraced and worked in alongside the practices that we have in place to improve and develop our businesses.  Those who reject or ignore it will ultimately be left behind as technology moves forward. There are still many aspects of our role as accountants where the human factor is required and as a business we are looking to work with AI to allow us more time to focus on advice rather than simply number crunching.” 

Katrina Turton (Director)

“AI represents a great opportunity for businesses that are prepared to embrace the new technology. Although some business decisions are made using a gut feeling for the situation or problem and I think AI will not therefore fully take the place of the accountant in the future.”

Russell Geary (Director)

Conclusion 

Artificial Intelligence is already bringing radical changes in the accounting sector and will continue to do so, but we don’t think it will replace accountants. Yes, there is a lot that it can do but you will still need accountants for the more complex decisions and jobs. 

SMEs don’t bin you accountant just yet. With the addition of AI, us accountants will have more time to focus on other tasks to benefit you and your company. Moving with the times and technologies is a must for any business and synergy between man and machine is certainly a winning formula for your company. 

If you have any questions about this blog or just a question in general, please get in touch using the contact form below.