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panel discussion
Jahan Zahid

Machine learning, AI and its impact on accounting

16th Nov 2017
Business Investor and Consultant
In association with
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Machine learning and AI are terms which get thrown around often. Whether or not you’ve bought into the hype, one thing is for sure, it’s something rarely discussed in much depth. Jahan Zahid, CEO of Indigo cashflow, held a panel discussion on “Machine Learning, AI and its Impact on Accounting” to try and address this. 

The panel

Pictured above: (Left to right) Daniel Houghton (Tide Bank), Damon Anderson (Xero), Wincie Wong (RBS), and Adam Goodall (Coconut).

Reconciling Bank Transactions

Xero’s recent Digital or Die Report reveals that 61% of accountants spend most of their time reconciling bank transactions. We asked the panel how they see that changing.

Adam Goodall, co-founder of Coconut, sees it as an upstream data problem and more about “how the data gets into the accounting package” in the first place. For him it’s about keeping payment and receipt together at the point of transaction.

Wincie Wong, digital propositions lead at RBS, shared their plans to solve the receipt capture problem through their partnership with Sensibill beginning early next year on their mobile banking app. The pain point they receive from their customers is at a very basic level of “knowing where your missing receipts are”.

Damon Anderson, head of UK partnerships at Xero, believes there’s a huge opportunity with machine learning and Making Tax Digital (MTD). For him a big part of their strategy is removing the manual entry and compliance elements and “repositioning the role of the accountant from the back office to the front office”. Their vision is centred around “code free accounting” and removing any of the traditional accounting from the customer.

Daniel Houghton, who heads up partnerships at Tide Bank, believes that if firms don’t adapt digitally they end up “bogged down in admin” and get “killed by being left behind”. For him, not having clean data feeds stops businesses from being able to make those key decisions which lead to the “1% differences”.

Approaching MTD Deadline

The exchequer will surely be looking forward to MTD coming into force, hoping to address the £3.5bn shortfall in 2014/15 revenues, due to mistakes in VAT returns alone. We explored what’s likely to happen as we approach the MTD deadline.

Anderson sees the compliance element as “way ahead of the game” and would like to see a future where accountants more readily adopt the “advisory stuff, in predicting where a business is going to be”. He sees the opportunity for machine learning to come into such services like cash flow forecasting.

Will compliance for the accountant be going away anytime soon? Not likely, according to Goodall who highlights the fact that “there’s differences between businesses that you can’t always account for, qualitative factors that aren’t really feeding into those models”.

Anoop Rehal a Director from BDO UK LLP, who was at the event, agrees that the advisory piece is important but worries whether businesses will get the right advice. Part of that for him stems from accountants needing to be taught how to be advisors in the first place.

Will accountants need to learn to code?

With a danger of completely relying on machines to make decisions, we discussed whether accountants will ever need to get under the hood and understand computer code.

One of the audience participants was quick to stress the importance for accountants to “understand how information is generated in the first place”, and felt nervous in an environment which relied completely on the machine.

Goodall believes it’s going that direction, especially with audits likely to become more technically demanding.  

Houghton was less sure about the coding aspect, but sees the accountant needing to be “absolute experts, about the software, and how it works”. He also foresees having potentially different software versions depending on the interpretation of the law you’re comfortable with.

Wong thinks "it depends on the kind of accountant you want to be, there’s always going to be people who are going to be more technical”.  

It would be interesting to hear what readers think about this.

Predictions for 2018

  • Goodall: We may see the first legitimate use of blockchain in the space
  • Wong: With Open Banking coming into force early next year, we can expect to see innovations in applying that to create new digital experiences
  • Anderson: Removal of early processes at the point of sale, before transaction data gets into the accounting system
  • Houghton: Google and Amazon providing more coding as part of the transaction and for that to show up on the bank feed

Replies (7)

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By kmccormick22
16th Nov 2017 17:45

AI actually scare me, because it's still in its infancy, and already replacing humans. Being that accounting is mostly an industry of "numbers," it will surely reduce the number of actual people a firm will need to employ. (creating more angry populists?) It will also keep accountants on their toes to learn the latest software, which, I imagine is a positive.

Thanks (1)
Replying to kmccormick22:
Jahan photo
By Jahan Zahid
16th Nov 2017 21:34

90% of people in Tudor England were farmers before automation struck, so it's happened before. The key will be to adapt quickly and I agree that it will be important to keep learning.

But I don't think AI will replace humans in accounting as relationships will always be important. What's more likely I think, is the role of the accountant will change to be more technical and advisory driven. There's a nice paper by pwc on the skills future accountants will need:

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Replying to jzahid:
17th Nov 2017 21:09

Changes re farming are a bit later, more late 17th through 18th century, and enclosure tended to be the initial driver, pushing people of the land from strip farming creating economies of scale on the land by concentration, such that agriculture could support, re production ,a non agrarian population (See Mingay or Thirsk)

The reduction in available labour then encouraged innovation, seed drills etc, and the Enlightenment drove a thirst for knowledge and a more scientific approach to agriculture, again increasing yields.

Industrial growth came from this now available urban population and involved capital, machinery, labour and know how in unity, we then developed city slums which only started to seriously be addressed in the later 19th century.

But the difference is the tech seems more to have been driven by the population movement rather than itself driving the population movement, AI is the other way around and will be a much faster process (The world is now faster) leading to some very serious social changes in a very short space of time.

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Man of Kent
By Kent accountant
16th Nov 2017 22:56

"...61% of accountants spend most of their time reconciling bank transactions..."

Sounds more like bookkeepers than accountants

Thanks (3)
By youngloch
18th Nov 2017 14:11

Bank feed and automatic ‘coding’ is all well and good and may be reasonably reliable but it still needs overseeing and management.

More submissions and deadlines will make us managers of data rather than creators of data and the same may be said for bookkeepers.

To put it another way we are in charge of the robots.

For now though the simple fact remains that with bills and receipts it’s easier for the client to just bag things up and it’s quicker for my staff to enter (into cloud software) the bills manually rather than take a photo or scan and then code each one which is a FAR longer process than my staff entering between 2-4 per minute at a normal pace

And as for jobs of the future well, right now, think of those thousands of trainees studying aat etc reading the tone of the article.

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Replying to youngloch:
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By Jahan Zahid
21st Nov 2017 19:27

I agree that there will be an increased need for overseeing the algorithms which automate the data tasks.

In any case, there is no question that accountants and bookkeepers will need to adapt in a more tech driven world. Brad Smith, the Intuit CEO put it quite bluntly recently by saying old-school accountants will be "struggling in 5 years" because of AI

One could look at this as a threat, but really I see this is an opportunity for accountants to use AI to augment their role as an advisor.

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By justsotax
29th Nov 2017 10:05

always the next big thing...remember 3d TV's....and the curved one's....they have faded slowly but surely because they don't actually address what people want. I just throw my bag of receipts in a bucket and the computer will sort it out....or do I have to pay for everything by card....will it ask about my use of home or parking habits (no receipt...but paid by cash)....will it automatically do my journals and allocate dividends in the most tax efficient way....

Maybe...but at what cost....will the plasterer or electrician (yes those trades still exist) be able to afford such software...

Its funny they talk about cars being unmanned...yet we still don't appear to have any trains unmanned...and they run on a single track....

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