Accountants fighting artificial intelligence overlook benefits to clients

Artificial intelligence (AI is thundering into all segments of society like a runaway freight train, and the technology’s business-use environment has three principal participant groups: those who will manage AI well and use it to best advantage; those who will fear or struggle to understand its uses and potential; and others, like Nobel Prize-winning economist Paul Krugman, who will get AI’s future as wrong as he did the internet’s.

“By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine,” he wrote in an economic swing-and-miss. AI’s impact society-wide will be as big as or bigger than the internet’s. Companies and countries are in a frantic race to produce ever-more advanced AI.

The starting gates on AI have been open for a while, but according to survey results published on CFO.com on April 17, many accounting firms have yet to leave the gate and are wondering if they should run with AI at all. Of the accounting firms surveyed, 73% said they weren’t using AI; more than a third said not only are they not using AI, they have no plans to do so in the future.

The advantages of AI in accounting are principally time savings and efficiency; AI can carry out repetitive tasks, such as receipt reconciliation – in which receipts are compared, for example, to bank deposits or statements or invoices to the firm – much faster and more continuously than can human beings. Standard bookkeeping tasks can be assigned to AI. Discrepancies or inconsistencies in financial activities can be more quickly seen.

There’s a concern among some accounting professionals that AI will negatively affect their jobs, much like other professions as technology changes. What AI is more likely to mean is a change in accountants’ responsibilities. As routine tasks are adopted by AI and detailed financial information is accessible faster and in greater depth, accounting professionals can devote more time and expertise to giving clients financial recommendations and business direction: AI won’t do away with the necessity of accountants to their clients: it’ll change how accountants are necessary to their clients.

AI’s principal disadvantage is that if the AI system isn’t designed or set up properly, it will result in bad data in real time. Another potential issue is exposure of sensitive data (which exists with or without AI). Like an airplane pilot relying too heavily on their automatic pilot, accountants or firms may become over-reliant on the technology. Extreme caution, exercised by people – human beings – who know what they’re doing, is indispensable.

What is irreplaceable is the knowledge, judgment and experience of trained accounting professionals who know the laws and rules, and can use AI to clients’ advantage. It’s not how the information is compiled; it’s the effectiveness of the decisions made using that information.

Standing in the gap against AI is like holding out against using the internet as it evolved, because it was new and different. Anyone putting stock in Krugman’s 1998 prediction that the internet’s impact on business would be minimal would by 2005 have been well behind the curve – or the eight ball. The same is true today about AI.

This article first appeared in Knox News.