AI: Changing the Landscape of Accounting
What exactly is Artificial Intelligence?
When someone says ‘artificial intelligence’, what is the first thing that comes to mind? Most of us imagine an army of robots in a silver suit pitting against humans. But there is still a significant portion of the community that envisions a brighter future where AI would serve them in every possible manner from making them bed-tea to knitting a sweater for them.
Although the latter sounds more fun, both these scenarios are unrealistic. Both of them stem from movies that project the image of AI in a certain way. Therefore, a need to understand what exactly Artificial Intelligence is arising.
In plain simple words, Artificial Intelligence is the ability of a machine to think and learn. The concept of AI is based on the idea of creating machines that are capable of thinking, learning and acting just the way human beings do.
‘The term Artificial Intelligence was coined by a Stanford researcher John McCarthy who defined the key mission of AI as a sub-field of computer science.’
But is AI the same as Machine Learning and Robotic Process Automation?
This is an important question as these terms are often used interchangeably by people. But it is a bit difficult to distinguish these terms since there is no defining standardization process or governing body.
But by and large, the difference is that Artificial Intelligence is an overarching term where technology is able to perform tasks with acumen and Machine learning is an application of Artificial Intelligence that learns by accessing copious amounts of data and relying on patterns and inferences to draw conclusions.
Robotic process automation, on the other hand, is a technology that works best with well-marked processes and parameters that are fixed and repetitive. Although they are used interchangeably, all three aims at increasing productivity and make businesses run smoothly.
A simple example of RPA is the backend process of online shopping; an example of AI is the virtual assistants in smartphones like Siri and Google Assistant, and a daily life example of machine learning is speech recognition (the translation of spoken words into text).
“We’re making this analogy that AI is the new electricity. Electricity transformed industries: agriculture, transportation, communication, and manufacturing — Andrew Ng”
The Evolution and Journey of AI
Artificial intelligence’s spike in prominence and incorporation in machines for technology and hardware doesn’t mean it’s a fresh new thought. It’s been a desire and objective of software engineering pioneers since the mid-1950s and has advanced unimaginably in the 21st century. As of late, AI has integrated itself with different parts of our lives in the form of the power behind the Chatbot upheaval, smart home systems and applications, and assistive voice-based technologies like Siri and Alexa.
Artificial Intelligence has become a popular expression of sorts in recent years, and keeping this in mind it has become difficult to isolate the hype from its reasonable potential, AI is established in an exceptionally practical idea. Simply put, AI is one of the most progressive ideas in intelligent systems and decision making in years.
In the near future, Artificial Intelligence is placed to deliver an enormous opportunity to accountants and assures to bring a new standard of efficiency. In the grander scheme of accounting developments, AI could revolutionize the profession in its entirety.
‘To err is human’
While human instinct is in itself a very own intellectual miracle, with especially propelled abilities in flexibility and adaptability, it has its restrictions. The human mind is continually stalled by its own irregularities and inclinations, with things like availability bias and affirmation bias demonstrating to be exorbitant in ventures and decision making of various sorts.
The beginning of machine learning and AI actually assure to assist human decision making rather than replacing them entirely. Therefore, accountants should fear that robots would take over the world eventually. Machine learning and AI are here only to automate the tedious and mundane tasks that accountants have to unnecessarily deal with on a daily basis. This would subsequently ensure more free time which will allow them to focus more on lucrative and in-depth analysis.
Prospects in Artificial Intelligence
“I have always been convinced that the only way to get artificial intelligence to work is to do the computation in a way similar to the human brain. That is the goal I have been pursuing. We are making progress, though we still have lots to learn about how the brain actually works.” — Geoffrey Hinton, Famous AI Scientist.
Artificial intelligence is the application of statistical models and algorithms that actually imitate cognitive abilities like pattern recognition and contextual and specific learning. The most important strength of AI is that it has the power to process copious amounts of data, its adaptability in learning from complex and constantly changing patterns and its steady consistency. But what makes this technology infinitely scalable is that AI never gets tired, combined with its unbiased approach and minimal margin for error.
Furthermore, AI equips accountants with tools to solve current and contemporary issues such as the delivery of error-free, reliable and cost-effective data. In addition to this, AI lets the accounting professionals utilize their precious time in high priority tasks like problem-solving, advising, and strategy developing, as opposed to doing redundant tasks of procuring and organizing data.
Benefits of AI in Accounting
Many businesses have already adopted Artificial Intelligence in their infrastructure. Ceterus founder and CEO Levi Morehouse groups the cloud with AI and robots as the future of accounting and invoicing, as he writes for Forbes.
In case one is aiming to an accountant, Morehouse recommends, assets like AI and the cloud are probably going to turn out to become commonplace in professional workplaces. That implies acclimating yourself with them can help set you up for the future of business — and accounting.
According to Morehouse, as an accounting professional, one can expect to use accounting AI and the cloud to compute huge amounts of data in a short time. In another article for the New York Times, Google Cloud’s Quentin Hardy explains that “cloud also offers unprecedented security for data, which could make it more appealing for accounting professionals.”
List of benefits that a professional can expect, using AI as a tool:
- AI automates repetitive learning: However, AI is not quite the same as equipment driven, robotic process automation. Rather than robotizing manual tasks, AI performs frequent, high-volume, computerized tasks dependably and without getting tired. For this kind of automation, human intervention is still as fundamental to set up the system and ask the correct questions.
- AI adds intelligence to existing products: AI is not an individual application; rather it enhances the capability of the products that a company is already using. For instance, Siri is an added feature to a new generation of Apple products and not a product in itself. Similarly, AI can be combined with large amounts of data to improve technology at home and workplace.
- AI analyzes more and deeper data: using networks that have many hidden layers. Building a fraud identification system with five hidden layers was practically inconceivable a couple of years prior. All of that has changed with staggering computer control and huge information. You need loads of information to prepare profound learning models since they gain legitimately from the data. The more information you can feed them, the more accurate they become.
- AI achieves incredible accuracy: through a set of algorithms that are designed to recognize the pattern. This was previously impossible. But now, interactions with Alexa, Google Search, and Google Photos are all based on this algorithm– and they keep becoming more accurate the more we use them.
Image classification and object recognition are some examples of the medical field that can now be used with the same accuracy as highly trained radiologists.
AI: Changing the Way Accountants Conduct Business
Accountants tend to have a mixed view on automation because of the advanced calculations and intricate attention to detail in the profession.
The simplification of specific actions through automation allows experts to accomplish tasks with more agility and focus on more important jobs. And although the thought of sharing sensitive and valuable company information over to digital processes cause some hesitation, certain automation tools are making a significant and welcoming impact on profits.
Technology like Artificial Intelligence has been adopted by nearly every industry including the accounting sector.
Writing for the Motley Fool, tech specialist Andrew Tonner reveals a projection that 85 percent of customer service interactions will occur between customers and chatbots by 2020, based on Gartner research.
Because of its ubiquity and usefulness, a Bank of America report estimates the economic impact of AI to be an increase of between $14 trillion and $33 trillion. (Source: https://online.maryville.edu/blog/automation-in-accounting/)
If you are brave enough to adopt the technology’s potential, automation and AI can help in decision making and high-priority operations strategy in accounting and invoicing. It’s estimated that in the future Artificial Intelligence in accounting will only continue to transform the industry and impact businesses in various ways.
AI-driven Accounting Tasks
Artificial Intelligence not only allows employees to get freed up from complex tasks, but it also helps businesses in their operations. Therefore, accountants who have embraced artificial intelligence have gained expertise and are making themselves valuable in business process transformations. Various accounting software such as cloud accounting software and business accounting software have eased and sorted the baffling game of accounting.
1. Monthly or quarterly close procedure
The sooner you get the numbers, the additional time your organization gets to make strategies about how the numbers can be leveraged to gain profits. Artificial intelligence can give you information from different sources, collating and merging it. This would not only accelerate this monthly process but also be progressively accurate with the adoption of machines.
The procuring and tracking process for many organizations is filled with paperwork. This means a lot of different formats, which may or may not be compatible with each other. However, organizations that are using AI can easily integrate and process unstructured data, which makes the procurement process not only paperless but a smooth one. Furthermore, AI can help them easily track changes in prices amongst different suppliers.
3. Accounts payable/receivable
Small and medium-sized businesses need quick order to cash cycles; therefore, the efficiency in account receivables is of utmost importance. Dependency on this aspect makes smooth and swift processing of the incoming payments critical for success and business growth. Hence, organizations that implement Artificial Intelligence reap its benefits after automating the accounts receivable process for the organization.
4. Audit Procedures
Another benefit is that AI tracks which file are accessed by whom and when, which enhances the security of files and sensitive organizational data. Moreover, Auditors do not have to search file cabinets for documentation because AI creates digital files that allow easy access to auditors when they are conducting an audit. This not only improves the accuracy and efficiency of audits but also makes it plausible to audit all financial transactions, not just samples.
5. Expense management
The most time-consuming task in an organization is reviewing and approving expenses therefore to ensure that they are in compliance with the policies of the organization one has to be meticulous. Artificial intelligence can check receipts, review expenses, and inform employees if there is any breach, it makes it all easier.
6. Artificial Intelligence chatbots
Common queries from users such due dates for bills, the latest account balance, and status on accounts can be efficiently resolved with the help of Artificial Intelligence.
Are Human Accountants Irrelevant Now?
Despite being very encouraging, the accuracy of machine learning algorithms used in most of today’s solutions still needs to significantly improve in efficiency to avoid 100 percent accounting errors and really fulfil their assurance of automation.
This is where the role of an accountant comes in. Even if machines are able to perform all the calculations or initial audit-related tasks, an accountant would still have to analyze the process and draw a meaningful conclusion. Machines are unable to do that, at least right now.
According to a study in Forbes, it is reckoned that accounting tasks such as tax, payroll, audits, and banking would be completely automated using AI, by the year 2020. So, does that mean accountants will be eliminated? Is this how AI will transform the profession?
Artificial intelligence programmed automated accounting software has freed accountants from doing tedious and repetitive tasks and allows them to widen their roles. This relieves them of the number of hours spent on administrative tasks and allows them to deliver value-added and better customer service to clients. Moreover, it helps them focus on the growth and overall success of the company.
For example, AI can be used to remember and implement a company’s expense policy during auditing of expense claims.
This would result in accountants no longer having to look through the receipts and categorize dates. This is very similar to cloud accounting disruption in the accounting sector; accounting professionals will definitely have to rethink their profile.
“Having machines to do all these tedious and repetitive tasks could sound scary for many accountants because they are also very time-consuming and thus very lucrative,” explained Stephanie Weil, CEO of Accounteam, a Silicon Valley-based accounting firm. “However, if the AI system is well configured, it can eliminate accounting errors that are generally hard to find and thereby reduce our liability and allows us to move to a more advisory role.” — Forbes
With the rise of AI, accountants are only expected to alter their roles in consulting and advising to ensure that they are taking full advantage of automation while helping their business grow.
Experts also believe that in the coming years, AI would be widely available even for smaller firms at a standard fare. Artificial Intelligence is already impacting many industries and would also revolutionize the accounting sector with a huge probability of a reduction in costs and increased productivity.