Adoption of Artificial Intelligence (AI) has the potential to significantly improve accounting standards and enhance service delivery for businesses, according to a report released by the Institute of Chartered Accountants in England and Wales (ICAEW).
The report, prepared by the independent professional body, highlights the opportunities AI presents, challenges facing actualization of its application in accounting activities, and how it could revolutionize business.
Digital technology and digital connectivity are fundamental to the future of every industry, from transportation to banking to retail and health care, in developed and developing economies alike. Some financial institutions have been investing in Artificial Intelligence for years while other firms are now beginning to catch up thanks to advances in big data, open-source software, cloud computing, and faster processing speeds.
AI systems have the capability to absorb and analyze large sets of data to enable better and more efficient decision-making. This in turn enables company management to make informed decisions on how to deploy organizational resources based on accurate financial results. This subsequently improves the quality of business and investment decisions. Although AI does not seek to entirely replicate human intelligence, on a task-by-task basis, AI systems increasingly produce results that are more accurate and consistent than those produced by humans.
“Despite its challenges, AI presents great opportunities for business and the accounting profession,” said
ICAEW Regional Director, Middle East, Africa and South Asia, Michael Armstrong, “There is need to encourage debate, interaction and learning between technology experts, businesses and the profession to reimagine the way that we solve fundamental business problems with the help of new technologies.”
The constant use and growth of artificial intelligence has tons of companies going head over heels in an effort to create better, more functional tech. Accounting software is getting smarter, automatically performing analysis, which previously required human intervention. Consider tasks like bank reconciliation: systems can learn how to completely automate this infuriating job, freeing up your time. The finance sector, given its heavy reliance on mass amounts of numbers and data, is a prime candidate for the automation offered by intelligent learning systems.
The adoption of AI systems will greatly enhance the accounting profession both in the short and medium terms. Firstly, AI systems will bring many opportunities for accountants to improve their efficiency, provide more insight and deliver more value to businesses. As more accounting firms embrace AI, this could lead to an increase in employment opportunities as accountants will need to be involved in the development of the new systems.
Accountants’ skillset will also widen, presenting higher efficacy within the profession. In the longer term, AI raises opportunities for greater impact, as systems increasingly take over decision-making tasks currently done by humans.
As much as adoption of AI will fundamentally improve accounting practices, it also poses various challenges. For example, AI investments will likely focus on areas with the biggest financial impact such as cost reduction opportunities, or those that are crucial for competitive positioning, since adoption of AI systems is costly.
AI can read many thousands of pages of contracts or agreements and very quickly summarise those, virtually instantly, based on whatever criteria you give it on what is and isn’t interesting. In simple terms, technology won’t just collect information, it’ll learn from what it stores.
This is likely to lock out beneficial ventures that lack the financial capabilities to run the systems. Furthermore, the volume and quality of data available within an organization is crucial to the success of AI systems. This is likely to affect smaller organizations, which may not have enough data to enable accurate results. Privacy and ethics pose another challenge, especially where AI systems are drawing on personal data. Fraud detection, for example, may need to access emails sent by employees, which will encounter legal and ethical limits.
“The increasing prevalence of AI systems will mean potentially seismic changes for business as we know it, as increasingly tasks that have been done by people are able to be taken on by machines. However, in the longer term, we believe this will enable finance professionals to concentrate on strategic planning and the areas where they can add real value. We shouldn’t pretend that this technology is without challenges. But it is coming, and businesses that prepare to embrace it will be best placed to take advantage of the new business environment,” said Armstrong.