AI in practice: Practical applications for accountancy
While the wider media is awash with breathless articles proclaiming how artificial intelligence (AI) will take over the world of work, the concept has only just begun to permeate the accounting space outside the Big Four.
This ‘AI future’ can seem quite nebulous and far away to your average high street firm, but according to one leading practitioner currently using AI, there are practical, affordable solutions available now for accountants to apply, using techniques they may already be employing.
Speaking ahead of the Alternative AI for professional services event Becky Shields, partner at top 20 firm Kingston Smith, told AccountingWEB that it was important to cut through the hype and demystify what AI is currently doing for the profession, and what it could do in the future.
For Shields, the millions of pounds spent by the Big Four firms on AI solutions has skewed accountants’ perspectives, and there are reasonably priced, flexible tools firms can adopt now that could make a difference in the way they work.
One practical example of how Kingston Smith is using AI is in their audit function. The firm has partnered with North American AI provider MindBridge to use the tool as a sample selector.
“Rather than our trainees using random number sampling or a sample based on what they deem to be risky transactions, MindBridge ranks all of your transactions on a risk rating, and then depending on whatever sample size is you pick it gives you, say, the top ten riskiest transactions,” said Shields.
“It picks a sample that stands up to scrutiny by the regulators. If someone asks me why we have audited a particular sample, I can explain the computer-based technique which is a lot more robust than saying ‘one of my trainees picked ten transactions’.”
One of the things that has impressed Shields about the MindBridge tool is its learning capability.
“Over time MindBridge will improve its ability to identify risk transactions,” she said. “Using machine-based learning techniques, the software will learn more about what a ‘normal transaction’ looks like and get even better at spotting the risky ones.”
“Mindbridge will also learn from the weighting applied to each risk factor by its users, again helping to assess the riskiness of each transaction more accurately.”
While that is one of the practical applications of how the tool is currently used, the application has also given Shields a lot more to talk about with clients.
“Being able to look at an entire population of transactions and explaining ‘those transactions that are deemed risky and why’ is quite a useful conversation to have with our clients,” said Shields.
“HMRC is exploring these tools as well, so it’s useful to highlight any issues early on and say ‘this is the sort of thing that might get picked up if anybody else does a deep dive of your transactions and to advise our clients on how to improve the quality of the data’”.
With a client base made up predominantly of small and medium-sized enterprises, for Shields and Kingston Smith some of the added value of AI comes in being able to bring big data analytics to the table for small businesses.
“For SMEs, AI and big data doesn’t necessarily exist because they’re filing abridged accounts and not publishing their statements, so benchmarking data is limited.
“Some of our clients don’t want or need an audit, but do see the value in us performing a deep dive into their audit trail, so we’ve actually sold that as part of the solution as well. Equally, AI comes up in tenders. People ask specifically about computer-based audit techniques, so the benefit is that we’ve got a real solution we can talk about”.
AI for everyone?
For Shields the message is simple. Accounting firms don’t have to spend as much as the Big Four on AI to compete.
“Terms like AI and big data analytics are banded about, but some of it is stuff we’ve always done as accountants,” said Shields. “It’s affordable to implement, the training is simple, and in terms of cost, we are talking about less than an hours’ time for a partner which we haven’t had any problems passing on as it stands – in fact, it has almost been a negative cost implication for us so far.
“I’d say to people don’t be afraid of it, it’s not going to cost you a fortune and it’s not difficult to implement”.
To learn more about how AI is being applied in the accountancy sector, register to attend the AI for professional services event.