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AI & accounting: Balancing risk and opportunity

28th Dec 2023
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As we approach the new year, it’s clear that 2023 will be known as the year that artificial intelligence (AI) emerged as a game-changer. Tools like ChatGPT have quickly become embedded in many areas of life, and with accountancy one of the areas most susceptible to AI, it’s down to the accountant to manage the on-the-ground reality.

Amidst the excitement, it's crucial for accounting firms to tread cautiously, particularly when it comes to client data security and the reliability of AI tools. While AI can augment efficiency and offer valuable insights, the core of accountancy’s value remains inherently human-centric, emphasising the importance of personal relationships and prudent decision-making.

The AI revolution in accounting

Accountants have become used to technology muscling in on their profession, from the cloud’s impact on data storage to the avalanche of automation that has hit the market in the last decade. It may not be a surprise, therefore, that professions are broadly positive about the impact of AI.

Research from December 2023 in the US found that 69% of accountants believe AI will enhance, not eliminate, jobs and is a plus for the accounting profession. While the narrative around new tools often focuses on the risk for existing skills, the prevailing view is that AI serves as an augmentation technology. In the same vein as data extraction or automated forecasting, AI can free up time from routine tasks, enabling accountants to focus on complex, value-added activities that require human insight and expertise​​.

However, the true value of these tools will depend on how firms choose to integrate and offer these services.

Potential pitfalls of AI adoption

Accountants deal with highly sensitive information every day. This data is tied to businesses and individuals that they know – and have a measure of professional care for. AI tools, on the other hand, are a black box, full of data and processes that may not always be clear from the outside.

  • The pivot to AI-powered tools in accounting raises critical questions about client data security and the duty of accountants. As accountants feed sensitive information into AI systems, there is a heightened risk of data breaches and unauthorised access.
  • Meanwhile, even though AI can process vast amounts of data rapidly, it is important to remember that its outputs are not infallible. If accountants lean too heavily on new tools, we may see a risk of over-reliance on AI, leading to complacency in verifying the accuracy of its findings. 

We’ve already seen high-profile instances of lawyers letting AI errors slip through the net, leading to serious professional consequences. And closer to home a recent tribunal failed as the taxpayer had relied on “hallucinated” tax cases generated by AI. Even if work has been supported by AI, it’s down to accountants to be the final arbiter of accuracy and value.

Preserving the trusted advisor

Despite AI's capabilities, accounting remains a profession grounded in human judgement and relationships. One of the most valuable concerns for a client procuring the services of an accountant is knowing that they have a human in their corner.

  • The nuances of financial decision-making and client interactions cannot be fully replicated by algorithms – the amount of context and personal insight involved in dealing with a client is just too great. 
  • Accountants will need to maintain a hands-on approach, especially in interpreting AI-generated data and making final judgments about what parts of the output are most relevant or appropriate for the client in question. 
  • Checks and balances for AI will need to become part of the regular workflow in a firm, including regular audits of AI processes, cross-verification of AI-generated data, and continuous monitoring for potential biases or inaccuracies.

Accountants remain essential 

At its core, the role of the accountant is about more than number crunching. It involves strategic thinking, ethical considerations, and building trust-based client relationships—areas where the human element is indispensable.

  • As a trust-based profession, the ethical implications of using AI, particularly regarding client confidentiality and data integrity, remain key. 
  • Firms must establish clear guidelines on the limits of these tools in their practice, as well as realistic but ambitious goals around implementing these capabilities to remain competitive.

Essentially, AI should be viewed as a tool to enhance, not replace, the accountant’s role. The question for accountants is how to strike the right balance between leveraging AI for efficiency while maintaining the critical thinking and personalised service that define the profession.

Summary

As AI continues to make inroads into the accounting sector, it’s crucial for professionals to strike a balance between embracing innovation and maintaining the human essence of their role. 

While AI offers powerful tools for efficiency and insight, the accountant's judgement, expertise, and ethical considerations remain paramount. It will be down to individual firms and professionals to draw their own lines, leveraging the potential of these tools while keeping the human element at the forefront. 

Written by Bright