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Artificial intelligence (AI) is driving revolutionary change across industries. Over the years, technological advancements have been disrupting the accountancy profession, creating both opportunities and challenges. In particular, the current rapid rise of AI is poised to have a profound impact on the sector.
How can the profession reap the upsides of AI – and do so responsibly?
Accuracy is paramount in accounting. With AI comes the ability to significantly enhance, automate and scale human expertise to achieve the high level of precision needed for reporting and compliance.
Beyond that, the ability of AI to analyse vast amounts of data at high speeds is expected to transform the way accountants handle financial information. Machine learning algorithms can identify patterns and trends in financial data that may not be immediately apparent to human analysts. This allows accountants to gain deeper insights into a company’s financial health.
Companies can also leverage AI for its predictive and analytical prowess.
Predictive analytics, powered by AI, can help generate financial forecasts for revenue, expenses, profit and cash flow, and enable more robust business planning. Companies can also predict potential risks by analysing historical data and identifying emerging trends, thereby enhancing the accuracy of risk assessments. The insights derived from AI-driven analysis offer companies actionable intelligence to bolster internal controls and improve operational resilience, while enabling more informed decisions.
Additionally, AI can be used to monitor transactions and flag any anomalies that may indicate non-compliance or fraudulent activities. By doing so, AI helps businesses adhere to financial regulations and avoid costly penalties.
Another upside is the productivity gains. Traditional accounting involves a considerable amount of repetitive work, such as data entry, invoice processing and reconciliation. AI-powered tools can automate these tasks, reducing the time and effort required by human accountants. For instance, AI algorithms can quickly scan and process invoices, extract relevant data and update financial records without human intervention. This not only increases efficiency but also minimises the risk of human errors.
AI is also able to not just update but validate the accuracy and reliability of data across multiple credible sources, which is particularly useful in companies where there are numerous complex systems that do not necessarily “talk to one another”.
Further, some companies are taking the AI capability a step further by using generative AI to help with drafting result announcements and annual reports to shareholders.
Leveraging AI for audits allows auditors to enhance operational efficiency, strategic insights and risk assessments.
Routine audit tasks such as reconciliation, document review and analysis can be automated, while time-consuming activities like sifting through lines of journal entry data – which would previously take days – can now be completed by AI in minutes. This allows auditors to dedicate more time to complex analysis and critical judgement where it is most needed. The outcome is more accurate and focused audits delivered with increased effectiveness and efficiency.
By using predictive analytics to analyse historical data, auditors can forecast potential risks and pinpoint higher-risk areas that may need further investigation. Moreover, Al algorithms excel at identifying patterns within large datasets, flagging transactions that deviate from patterns and detecting anomalies or outliers such as errors or fraud. This allows auditors to zero in on inconsistencies that require closer examination.
In delving deeper into data through AI, auditors can also gain insights that may not be visible through traditional audit methods, including valuable information about the company’s financial health, operational effectiveness and opportunities for improvement.
For audit professionals, AI-powered tools such as chatbots and virtual assistants are also significantly changing the way they interact with clients. These AI tools can handle routine client enquiries, provide instant responses and even schedule appointments. This not only improves client satisfaction, it frees up accountants’ time to focus on more value-added tasks. Further, AI can analyse client interactions to identify areas for improvement, helping accountants to enhance their services.
While the benefits of harnessing AI in the accountancy sector are substantial, there are also risks that must be managed.
One of the primary risks is the potential for errors in AI algorithms. If the AI system is not properly trained and updated, or if it encounters data that it has not been programmed to handle, it can churn out inaccurate results.
Poor data quality and data bias also produce inaccurate conclusions, and AI can inadvertently perpetuate and even amplify bias in data. To safeguard against this, it is crucial to use diverse and representative datasets to train AI systems. AI systems should also be monitored and evaluated continually to ensure accuracy and reliability.
Data security and privacy are also significant concerns when using AI in accounting. AI systems access vast amounts of sensitive financial data, which makes them a potential target for cyberattacks. To that end, regular security audits and updates should be performed to protect against emerging threats.
Finally, there is the risk of over-reliance on AI. While AI can greatly enhance the efficiency and accuracy of accounting processes, it is not infallible. When working with AI, having a questioning mind and the ability to make critical assessments – essential skills for accountants – are vital. Notably, they must exercise professional scepticism by verifying AI-generated conclusions, assessing AI outputs and the data that inform them, and be vigilant against automation bias.
All in, a robust AI governance framework is essential to ensure that AI systems are used in a manner that respects data integrity, privacy and ethical principles. The framework should encompass all aspects of AI deployment and be backed by an organisational commitment to responsible AI use.
As AI proliferates, job roles and responsibilities in the accountancy profession will invariably evolve. This necessitates professional development geared towards building a new set of skills for accountants. Proficiency in data analytics, an understanding of AI algorithms, and the ability to work with AI tools are becoming essential competencies. While concerns about job displacement due to AI are acknowledged, AI is unlikely to replace accountants entirely. The human elements of critical thinking, ethical judgement and interpersonal skills are highly valuable – and remain irreplaceable.
In conclusion, by ensuring that continual professional development is in place and that AI is wielded ethically and responsibly, the accountancy profession can confidently reap the upsides of the technology so as to be competitive, stronger and future-ready for an increasingly digital world.
Lee Wei Hock is Singapore Head of Assurance, Ernst & Young LLP.
The views reflected in this article are the views of the writer and do not necessarily reflect the views of the global EY organisation or its member firms.
© 2024 Institute of Singapore Chartered Accountants
