Artificial intelligence is an effort to make a computer 'smart.' It is the ability of a computer or a machine to learn and think on its own. Its use is suited to mundane, repetitive, and error-prone tasks. Integration of AI with machine learning and natural language processing (NLP) makes it a powerful, cutting-edge technological tool that has the power to transform. The big four accounting companies, KPMG, Deloitte, EY, and PwC, have already incorporated AI into their accounting processes. The future of the accounting profession supported by AI looks bright. Yes, it will make you wonder and ask - Will AI replace accountants? The answer is a yes and a no. AI in accounting will reduce the number of employees you will require to perform the basic repetitive and taxing tasks. As a result, the employees can finally have the time to brainstorm. To discover the no, keep reading till the end. According to reports, the market for AI in accounting will register a CAGR of 30% over the period 2021-2026. The fastest-growing market is the Asia Pacific, while the largest market is North America. AI accounting is rapidly taking over the world, and how! Let's quickly look at how AI and accounting complement each other and can change the way things look for you and your employees of the accounts department.
Following is the overview of an accounting process - identification of transaction, recording it in the journal, Posting it in a ledger, Trial balance, closing the entries, preparing financial statements, adjusted trial balance, adjusting journal entries. Now, this is just a simple overview. Accounts do a lot more than this. In a world without AI, the employee would use paper and pen to do this. Thankfully, with AI, accounting has made progress from paper and pen to software-based accounting. Traditional bookkeeping is taxing and hinders you from tapping your employees potential fully. AI accounting will speed up this process, eliminate possible errors, and return accurate data. According to a published survey by FreeAgent, nearly 81% of accountants believe that the integration of AI can save up to 10 working hours every week. Additionally, AI can bring in additional annual revenue of 68,163 pounds.
The IL&FS fraud case was a result of a grave audit irregularity in IL&FS accounts. How much did the fraud case cost them? A big fat sum of INR 91,000 crore. A series of human errors cost them crores. AI accounting can easily recognize fraudulent patterns and alert you in advance. They can scrutinize every document for you, check for its compliance with the accounting laws, and then alert you for double checks.
With the integration of AI, several organizations are becoming data-driven by the day. They use these insights to formulate their policies, call crucial shots, and strategize their operations. AI can process tonnes of data in no time. Usually, these insights are only available at the end of every month or quarter or year. AI can prepare these reports in real-time and as many times as you want. Delivering reports is one thing, the ability to deduce what and how from them is another. While AI can do the former efficiently, combined with machine learning and NLP, it can also do the latter. These reports are far more reliable, provided their accuracy.
Besides bookkeeping, the accounts team also has a lot of data to input from several documents. And while this task sounds easy, it is highly prone to errors. The software will do it for you without any mistakes. Furthermore, it can also analyze the data, highlight any red flags, and notify if any information is missing.
AI readily speeds up the low-level processes, which in turn increases the efficiency at the top. One cannot ignore the fact that the basics run the company. All the data that a company can use to its advantage comes from these processes. But this is not it. AI goes a step further. Auditors can take the help of AI to read documents such as sales and lease contracts. They can do this for all the documents with 100% accuracy and speed up the audit process. AI will also identify risky behaviour based on learnt information. It can also help you manage the cash flow by studying patterns and returning the possible outcomes. What does the availability of complex data in real-time say? A shift from reaction to response. Research by MIT Boston concludes that nearly 85% of people globally believe that AI will enhance their competitive advantage.
A question asked by most. The answer is simple. The possibility of computers replacing accounting in the near future is high. It is possible and a wise choice. Accounts and accounting firms will leverage AI for its efficiency, efficacy, precision, and speed. While this may scare you, a look at the role of an accountant will provide relief. Accountants will no longer spend their hours performing mundane tasks but use their expertise to benefit the company.
The answer is a no. While you can teach a computer to replicate the working of a human mind, you cannot fully succeed at it. Computers cannot replace the human mind. What it can do is enhance the working of the human mind by providing it with necessary information. Organizations hire employees for what they do the best - strategic planning, creative thinking, and decision-making. Besides, no matter how well technology can operate alone, it will always need thoughtful supervision. Implementation of technology without intention or adequate planning can be detrimental. Organizations need to carefully plan out the balance between AI and accounting employees to ensure they make the most out of the two.