Implementing AI in Accounting: Risks and Benefits

As artificial intelligence gains increasing traction in business, offering huge opportunities for efficiency, some potential pitfalls loom, according to local accounting experts who count Long Island organizations among their clients.

With the right AI-based technology, tedious and repetitive tasks in areas like accounts payable and receivable can become infinitely easier. But without safeguards like encryption and well-thought-out policies, businesses can be exposed to risk rather than reward.

“Some clients have blocked access to AI applications like ChatGPT, while others have established committees to oversee their responsible use,” said Bonadio Group CPA and said Jennifer Wood, Head of Assurance.

“AI is a buzzword in public accounting, and companies including us are looking for ways to get the most out of it,” Wood adds. “We are enthusiastic but cautious and consider data security and our clients.
keep a secret. ”

For accountants, the implications go far beyond taxes.

According to a report from the Journal of Accountancy last year, “About half of all tasks performed by U.S. workers could be completed faster with generative AI without sacrificing quality.” “Many accounting firms are open to further automation,” he pointed out.

According to a 2022 study, nearly a quarter of customer advisory services operations have implemented AI, the magazine reported.

“We are arguably on the cusp of one of the biggest AI innovations of our time. Chat-based services like ChatGPT are incredibly intuitive, easy to use, and affordable for any business. ” said Daniel Bridges, director of innovation at Mazars.

Despite these technological advances, Bridges added that we should still approach this with cautious optimism. “But we need to recognize that this is really in its infancy, and most companies haven't yet figured out how to extract the most value from the potential,” Bridges said. “While this technology improves efficiency and accuracy, it can also negatively impact quality.”

Experts say accounting firms are currently in the “exploration” stage of understanding AI, and many of their clients are not yet that far along. Strict guidelines from accounting industry bodies have yet to incorporate the latest advances, such as chat GPT and best practices for using AI-based applications, or create written guidelines.

But for many, it is becoming increasingly difficult to deny the power this technology brings to accounting, auditing, and related operations.

“AI is revolutionizing our company.
Efficiency, particularly in tax and audit practices. For example, optical character recognition technology allows us to quickly process client documents into tax forms. ” said Al Borghese, director of Cellini & Associates in Bohemia.

This also means that for repetitive tasks such as accounts payable, the software can scan and review documents, extract the necessary data, and compile it into applications that can expedite payments. This can significantly reduce the time it takes to complete this.

Rather than reducing the size of the workforce because of AI efficiency, “it actually means that the workforce becomes less reliant on clerical-type (jobs) and starts using other skills, analytical-type skills. , and do more business,” Borghese said.

According to Bridges, integrating AI into workflows such as summarizing meeting notes will require changes to current practices. Meetings need to be recorded for transcription, and clarity of language and task assignments needs to be strengthened so that AI can accurately capture them. To get the most out of AI, we need to adapt to more structured and precise communication and learn how to effectively direct it with carefully crafted prompts.

“All of this requires an investment in technology, training, and most importantly, time,” Bridges says. “Accountants must be given time to experiment, test, and refine these activities.”

And many AI features still require human review. Consider a recent notable case. When a lawyer used AI to prepare legal documents to submit to a court, he discovered that in some cases, the applications contained fictitious precedents.

For auditors, AI can examine data and flag areas of potential fraud, greatly broadening the field of view. But experts say the audit function still needs trained professionals who can look beyond black and white to understand why the numbers don't add up.

Last year, industry professional associations American Institute of Certified Public Accountants and Canadian Certified Public Accountants jointly released a report titled “Data-Driven Auditing: How Automation and AI Will Transform Auditing and the Role of Auditors.” . The bottom line is that technology can make many aspects of your job easier, but it's not a silver bullet.

“It is important to understand what automation, analytics and AI are: enablers, just like computers,” the report says. “They will not replace auditors. Rather, they will transform auditing and the role of auditors.”

At this time, companies need to consider their policies and implementation plans, but common sense is on their side.

“[AI]won't give you a[perfect]answer, but it will give you a really good first draft and help you consider things you might not have thought of initially,” Wood said. said. In many applications of AI, it is important to have a human backstop to monitor the output and ensure it is accurate and useful.