This is from the “Accounting Makes Cents” podcast episode #33 released on Monday, 13 February 2023.
In today’s episode, we will tackle a topic which has been floating around the profession for a while, artificial intelligence. What I want to touch on is how artificial intelligence has changed accounting work so far and where it may lead to in the future.
Jump to show notes.
Let’s start off understanding what artificial intelligence is and what it does. In simple technical terms, artificial intelligence or AI for short, is a field of science concerned with building computers and machines that can reason, learn and act in such a way that would normally require human intelligence. Additionally, AI also involves analysing data whose scale exceeds what humans can examine.
Based on that description, you can likely already see where AI is used for in accounting the most. Both from the machine-learning side and the data-gathering side.
Initially, AI was really a controversial subject matter. There is a lot of discussion surrounding how AI evolves and how it learns and automates processes. In this regard, many spoke about how AI would take over many accounting jobs and functions that accountants currently do. And why wouldn’t we think that? There are many manual, tedious and repetitive tasks accountants do. Plus a lot of the work that accountants do are done on computers, which is the platform that AI is presented. So it was really a big thing when it was first introduced in the accounting field.
I’m here to say that, yes, it did change a lot of the work that we used to do, especially those ones where it was labour-intensive and very manual in process. Remember how we used to do accounting eons ago, where we used book ledgers and papers and pencils to record transactions. And then we moved on to using spreadsheets and files and accounting systems, and now we are on the AI era. No one can deny how the landscape has changed for accountants, especially in streamlining processes.
Benefits
Some of the biggest AI-fueled benefits in accounting are:
- How document authorisations on computer systems can now be automated. Let’s take procurement as an example. The system allows us to set up tiers and limits of authorisation. You may have an authorisation limit of $1,000, your supervisor may have an authorisation limit of $10,000, and his supervisor, basically your boss’ boss, has a limit of $100,000. So let’s say you place an order for $100,000. The computer is able to identify that you and your boss do not have the authority to approve this transaction and so after you create the purchase order, the system sends an authorisation request from your boss’ boss to alert him that he needs to approve this because you have created an order that exceeds both your and your boss’ limits.
- With that example as well, you can also see how AI helps in compliance and maintaining internal controls. Setting the limits up and separating authority level helps segregate the duty of procuring large orders, at the same time, it ensures that orders at a certain level are only authorised by the right people.
- Another area is automation of processes, so something like automatic billing or invoicing helps a company a lot because AI can handle a larger volume and can do things a lot faster.
- AI also helps a lot in generating reports needed for decision-making and interpretation. AI has seriously reduced the time it takes to get real-time data off the system. This helps with decisions because decisions are heavily based on information that is readily available at the time that you are making that decision. So it is important to get the relevant information as timeously as possible so as to make the right decisionn. We all know that we can make the wrong decisions if our information is not up to date.
Will AI replace Accountants?
The question of whether AI will be able to replace accountants still comes to mind. And in some parts, there are some fears that AI will. Look, this is technology, so as time goes on, it will become more sophisticated and more elaborate, and it can take on more. However, at this stage, AI is more a tool rather than a replacement. I personally believe that there are still many functions that an accountant does that is difficult for a machine to emulate. Yes, you can put formula in it, and make it follow certain conditions and specifications, but at the end of the day, there is still a human element that is hard to automate. When you offer opinions, when you provide advise, when you interpret and explain numbers and trends…those are really more innate for that particular person or accountant.
Show notes simplified
Certainly not a new topic, and one that continues to evolve and grow each day, MJ the tutor opens a discussion on how much artificial intelligence has impacted accounting so far.
Credits:
“Ding Ding Small Bell” (https://freesound.org/s/173932/) by JohnsonBrandEditing (https://www.youtube.com/channel/UC1RImxnsbfngagfXd_GWCDQ) licensed under CC0 Licence.
MJ THE TUTOR 