AI in Accounting: Everything you need to know!
Artificial Intelligence (AI) is the latest buzz in the Accounting industry with everyone talking about its transformative potential.
According to a recent survey by Deloitte, 84% of accounting professionals believe that AI will have a significant impact on the industry in the next five years. But what exactly is AI, and why is it important for accountants?
Crucially, AI is more than just a buzzword; it is a pivotal tool that can enhance the capabilities of accountants in a number of ways. And whether we like it or not, its inevitable impact is on the horizon for all sectors, not just accountants.
So, how does is work?
Well, this comprehensive guide to AI aims to explore exactly this, demystifying AI in accounting and providing essential insights for accountants looking to harness the power of Artificial Intelligence. We will also explore the essentials of AI training for accountants and accountancy firms!
So…let’s get into it!
1. What is AI in accounting?
2. How can I use AI in accounting?
3. Which AI tools are most commonly used in accounting?
4. Can you use ChatGPT as part of AI for accounting firms?
5. What are the challenges of using AI in accounting?
6. Will AI replace accountants?
7. Why is AI training for accountants and accountacy firms important?
8. What does AI training involved?
1. What is AI in accounting?
AI in accounting involves using artificial intelligence (AI) – a branch of computer science that deals with creating smart machines capable of performing tasks that typically require human intelligence – to enhance various aspects of accounting.
So, for example, it can be used to automate various processes, analyse data, and provide real-time financial insights. In doing so, AI can significantly increase the efficiency and accuracy of accountants by reducing the risk of human error and freeing up time for more complex and analytical endeavours. Sounds great, huh?
Well, let’s take a look at this in further depth.
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2. How can I use AI in accounting?
AI in accounting is increasingly versatile and can be applied to a wide range of tasks.
Most commonly, AI is used for:
Automating routine tasks
AI can automate repetitive activities like data entry, invoice processing, and reconciliation, allowing accountants to focus on more strategic tasks.
Enhancing financial reporting
AI algorithms can analyse large datasets to identify patterns and anomalies, in turn ensuring more accurate financial statements and aiding in better decision-making.
Improving compliance and reducing fraud risk.
AI can streamline compliance checks and flag potential risks, mitigating the likelihood of non-compliance and reducing fraud risk.
Efficient data analysis and business intelligence
AI tools can analyse financial statements and trends for anomalies and assist in business intelligence and decision-making.
Predictive analytics for budget forecasting
AI can analyse historical financial data to predict future income, revenue, and financial performance, supporting budget forecasting.
AI software is reshaping tax operations within accountancy firms in a number of ways:
Automation of tax compliance: AI-powered tools streamline tax compliance processes by automatically extracting and categorising relevant financial data, ensuring adherence to complex tax regulations. This automation reduces manual errors and saves time, allowing accountants to focus on strategic tax planning and advisory services.
Enhanced tax planning and forecasting: AI algorithms analyse vast amounts of financial data to identify tax-saving opportunities, predict future tax liabilities, and recommend optimisation strategies. This enables accountants to provide proactive tax advice to clients, helping them minimise tax burdens and maximise financial efficiency.
Fraud detection and risk mitigation: AI-based fraud detection systems analyse transactional data to identify anomalies and suspicious patterns indicative of fraudulent activity. By leveraging AI, accountancy firms can detect potential tax fraud more effectively, mitigating financial risks for both clients and the firm.
Real-time tax insights: AI-driven analytics provide real-time insights into tax-related trends, regulations, and market changes. This enables accountants to stay ahead of evolving tax landscapes, adapt strategies accordingly, and deliver timely advice to clients, ensuring compliance and optimisation in a dynamic tax environment.
As AI develops, the uses and benefits of AI in accounting become increasingly clear: integrating AI into your workflow as an accountant can significantly enhance efficiency, accuracy, and productivity, saving everyone both time and money!
3. Which AI tools are most commonly used by accountants?
So, now we know how AI in accounting works, let’s take a look at some of the up-and-coming AI tools and platforms that can be used to perform these functions.
Crucially, familiarising yourself with accounting AI tools is essential in leveraging their benefits. These are:
Vic.ai is an AI automation platform is designed for accountants to streamline workflows, especially in invoice processing and payments. It automates data extraction from invoices, enhances financial reporting accuracy, maintains compliance, and assists in audit preparation.
Docyt is an accounting automation software powered by machine learning algorithms and AI. It handles tasks like bookkeeping workflows, transaction categorisation, bill payment, and reconciliation and also aids in generating financial reports.
Tipalti uses AI for payables intelligence and processes, including automated invoice processing, supplier validation, and real-time payment reconciliations. It can also help with global regulatory compliance and fraud detection.
AI in forecasting software
Tools like Futrli employ AI for predictive analytics, assisting firms in financial planning, risk management, and fraud detection by identifying patterns in financial data.
AI-powered fraud detection systems
These systems, such as IBM Trusteer, analyse financial data to identify irregular patterns and anomalies that might indicate fraud or other financial irregularities
AI-enhanced audit tools
AI assists auditors, such as KPMG Clara, in analysing financial information, preparing audit schedules, and managing documents, thus streamlining the audit process.
Robotic Process Automation (RPA) for accounting
RPA technology is used to automate repetitive tasks in accounting workflows, such as data entry and invoice processing, thus reducing manual effort and increasing efficiency
Now, all this information can seem a bit overwhelming, and knowing where to start and how you can go about familiarising yourself with all this information can be confusing.
That’s where AI training comes in.
AI training for accountants and AI training for accountancy firms is essential when it comes to beginning your AI journey and integrating these systems into your workflow.
We will discuss more about AI training further on, so keep reading!
4. Can you use ChatGPT as part of AI for accounting firms?
Now, you might have noticed that ChatGPT was missing from the list above, and this is because ChatGPT and other generative AI tools are typically more focused on content creation and communication tasks.
However, this doesn’t mean they’re not useful!
In accounting, ChapGPT and generative AI can be used for:
Automating data entry and processing
ChatGPT can automate tasks like bookkeeping, calculations, and data entry, thus reducing errors and freeing up accountants for more complex tasks.
Enhancing client communication
ChatGPT can be used for communication and collaboration between accountants and their clients by providing clear, concise, and relevant information quickly.
Lead generation and market trend analysis
ChatGPT can assist in engaging potential customers, analysing market trends, and helping make informed financial decisions.
For global businesses operating in different time zones, ChatGPT’s round-the-clock availability ensures continuous support and assistance.
Here, it is important to mention that some accounting firms are quite cautious about letting their employees use tools like ChatGPT to input client data, and for good reason.
When it comes to handling sensitive information, safety comes first; even a small slip in managing this data could cause serious repercussions, possibly violating the confidentiality agreements firms have in place with their client.
So, it’s always wise to ask for permission from your employers before using this platform!
Now you may also be wondering: can ChatGPT analyse financial statements or solve accounting questions?
This is where limitations come into play. Whilst ChatGPT can offer preliminary insights and explanations and aid processes in a number of ways, it cannot replace the expertise and judgement of a trained accounting professional.
AI in accounting really serves as an assistant, not as your replacement. And here’s why.
5. What are the challenges of using AI in accounting?
Whilst AI is great for so many things, there are challenges when it comes to using AI in accounting.
1. Firstly, data security and privacy.
Utilising AI in accounting involves handling sensitive financial data, raising significant concerns about data security and privacy. It is essential to safeguard this data against unauthorised access, breaches, and cyber threats, and therefore, employing robust security measures is a must.
- Advanced encryption, stringent access controls, and secure data storage solutions.
- Adherence to data protection regulations such as the General Data Protection Regulation (GDPR) in the EU and the California Consumer Privacy Act (CCPA) in the U.S. is crucial.
Next, there are some key ethical considerations to take into account….
2. Ethical Considerations
The question on everyone’s lips: is there an ethical problem with using AI in accounting?
Well, yes and no.
The ethical implications of using AI in accounting stem primarily from the fact that AI systems are developed based on human-made algorithms and rely on data that may contain inherent biases. Since these biases can be embedded in AI, either intentionally or unintentionally, they raise significant ethical concerns.
- Bias and fairness. AI algorithms can perpetuate existing biases present in their training data. In accounting, this could lead to unfair practices in areas such as loan approvals, credit scoring, or fraud detection, where decisions disproportionately affect certain groups of people.
- Transparency and accountability. AI decisions in accounting need to be transparent, especially when they impact financial outcomes for individuals or businesses. However, many AI algorithms, particularly deep learning models, are often seen as ‘black boxes’ with limited explainability.
But this shouldn’t prevent us from using AI.
Rather, ethical concerns highlight the importance of comprehensive AI training for accountants and accounting firms to address these concerns and ensure fairness and transparency in AI-driven decision-making.
3. Skills and knowledge gap
The rapid advancement of AI in accounting has led to a gap in skills and knowledge among professionals in almost every industry!
In accounting, many don’t have the necessary expertise in AI, requiring significant upskilling and reskilling efforts. Therefore, as we have just mentioned, AI training for accountants and accounting firms is essential not only to ensure AI is used fairly and ethically but also to tackle the skills gap that is ever present in the accounting industry.
4. Integration challenges
Now, calling for AI training for accountants is easier said than done. This is because the final key challenge of AI for accounting firms is integration.
The process of incorporating AI with existing accounting, auditing and tax systems poses a significant challenge, especially when dealing with legacy systems. These older systems might not be compatible with modern AI technologies, requiring considerable effort to ensure seamless integration, data synchronisation, and effective collaboration between AI systems and existing software.
Therefore, high-quality AI training for accountancy firms is absolutely necessary to understand the issues and how to approach integration both within firms and to support clients.
5. Resistance to adoption and change management
Finally, introducing AI to accounting firms has not only technical challenges but cultural ones too.
Naturally, the introduction of AI in accounting can meet with resistance from employees who are worried about job displacement or are sceptical about relying on machine-based decisions.
Therefore, careful management of change within accounting firms is another must. These should ensure that all employees understand the benefits of using AI in accounting, involve comprehensive AI training for accountants to work alongside these technologies, and reassure employees that AI is not a replacement but rather an aid!
Here, we will explore why.
6. Will AI replace accountants?
The bottom line is: no, AI will not replace accountants.
Instead, AI in accounting is expected to transform the profession. As we know, AI excels at automating routine and repetitive tasks, such as data entry, basic number crunching, and certain forms of report generation. However, as we also know, the role of an accountant is much more than just these tasks.
Accountants play a crucial role in strategic planning, interpreting financial information, providing advisory services, and making complex ethical decisions, which are areas where AI currently falls short.
Here, we will explore why.
The integration of AI in accounting should be seen more as a collaboration where AI handles routine tasks, in turn freeing up accountants’ time to focus on more value-added activities like financial analysis, strategic advice, and personal client interactions.
Therefore, rather than replacing accountants, AI is expected to augment their roles, making them more efficient and enabling them to provide more significant insights and value to their clients!
That’s a relief!
Okay, so now we know what AI is, the tools we can use, why it’s useful, and some potential challenges, you might be thinking – what do I do with all this information, and where do I begin?
Well, this is where we finally discuss AI training
7. Why is AI training for accountants and accountancy firms important?
As the accountancy industry undergoes rapid transformation, embracing AI is no longer an advantage — it’s a fundamental necessity!
Large global accountancy players such as PwC have already observed a significant shift, with AI taking over many tasks traditionally assigned to junior staff. KPMG has also announced plans to invest over $2 billion into AI and cloud services. So, it’s best to get comfortable with AI sooner rather than later, as its impact on day-to-day operations and long-term strategies is inevitable.
With that in mind, let’s breakdown the main reasons why AI training is so important:
Importance of AI training for Accountants:
1. Career Advancement
Accountants who undergo AI training enhance their professional skills and expand their career opportunities. In a rapidly evolving industry, proficiency in AI technologies sets accountants apart from their peers and opens doors to roles that require data analysis, automation, and strategic decision-making.
This can lead to promotions, salary increases, and access to more challenging and rewarding positions within the accounting profession.
2. Improved Efficiency and Productivity
As we have previously mentioned, gone are the days of drowning in repetitive tasks and drowning in paperwork. Thanks to AI, accountants can now reclaim their time and speed up their productivity. With AI-powered tools handling data entry, reconciliation, and analysis, accountants can redirect their focus to strategic tasks like financial planning, forecasting, and providing client advisory services. Not only does this boost job satisfaction, but it also amplifies the impact of the entire accounting function.
3. Enhanced Client Service
With AI training, accountants can deliver tailored and insightful financial guidance to clients. By leveraging AI technologies for data analysis and predictive modelling, accountants can furnish clients with invaluable insights into their financial performance, risks, and opportunities. This not only fosters stronger client relationships but also establishes accountants as trusted advisors who provide strategic value beyond conventional accounting services.
Importance of AI training for Accountancy Firms:
1. Competitive Edge
Accountancy firms that undergo AI training gain a huge competitive advantage in the marketplace. They can offer more advanced and efficient services to clients, such as automated data analysis, predictive financial modelling, and real-time reporting.
By demonstrating proficiency in AI technologies, accountancy firms can position themselves as innovative and forward-thinking, attracting more clients (and employees) and opportunities in the rapidly evolving digital landscape.
2. Scalability and Cost Efficiency
AI training for accountancy firms helps organisations to automate routine tasks and processes, leading to increased scalability and cost efficiency. By leveraging AI-powered software, firms can handle larger volumes of clients and transactions without proportionately increasing their workforce.
This scalability allows firms to grow their business without incurring significant overhead costs, ultimately improving profitability and competitiveness.
3. Risk Mitigation and Compliance
AI training equips accountancy firms with advanced tools for risk assessment, fraud detection, and compliance monitoring. AI algorithms can analyse vast amounts of financial data to identify irregularities, anomalies, and potential compliance issues.
By proactively detecting risks and ensuring regulatory compliance, firms can protect their client’s assets and reputations, fostering trust and long-term relationships.
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8. AI training for accountancy firms: what does this look like?
AI training for accountants and accounting firms typically encompasses various aspects, from understanding the fundamentals of AI and machine learning to applying these technologies in accounting-specific contexts.
Here’s an outline of what this training might typically look like:
1. Introduction to AI machine learning
AI training for accountancy firms typically starts with an introduction to the basics of AI and machine learning. Mastering key concepts like natural language processing is crucial for accounting staff to quickly adjust to emerging accounting AI tools that may be integrated into their routine workflows.
2. Data analysis and management
Accountants are already trained in managing and analysing large datasets, yet it’s increasingly vital for them to master these tasks while leveraging AI tools. This entails acquiring knowledge about data structures, data cleaning, and pre-processing techniques to prepare data for AI applications.
3. Application of AI in accounting tasks
The core of the training often revolves around applying AI in specific accounting tasks. This can include automating routine tasks like data entry, reconciliation, and report generation, as well as more complex applications like fraud detection, risk assessment, and financial forecasting
4. Ethical considerations and bias in AI
Training also covers the ethical considerations and potential biases in AI systems. Accountants learn about the importance of ethical data usage, understanding algorithmic bias, and ensuring that AI applications comply with regulations and ethical standards.
5. Software and tool proficiency
Practical training encompasses hands-on experience with specific AI software and tools frequently employed in accounting. This includes familiarisation with renowned accounting software integrated with AI functionalities (refer to the list above), along with specialised tools for data analytics, visualisation, and reporting.
Understanding how to utilise these tools effectively is essential for enhancing efficiency, accuracy, and decision-making capabilities (the major benefits of using AI), within the accounting profession, equipping accountants with the skills needed to thrive in an increasingly AI-driven landscape.
6. Integrating AI into business processes
Accountants also learn how to integrate AI tools into existing business processes and workflows. As we mentioned, this can be particularly difficult, particularly when dealing with legacy systems!
This training includes understanding how to collaborate effectively with AI systems and how to interpret and communicate the insights generated by AI to inform business decisions.
7. Continual learning and adaption
AI training programmes also underscore the necessity of staying abreast of the latest advancements and best practices in AI for accounting.
This ongoing education ensures that accountants remain equipped with the knowledge and skills needed to harness the full potential of AI technologies, driving efficiency, innovation, and competitive advantage within the profession.
8. Case studies and practical scenarios
To consolidate learning, AI training frequently incorporates case studies and practical scenarios, allowing accountants to apply AI tools and techniques in real-world contexts. This approach is invaluable for comprehending the practical implications and benefits of AI in accounting, enabling accountants to gain first-hand experience and confidence in leveraging AI technologies effectively.
By engaging with real-life examples, accountants can enhance their problem-solving skills, decision-making abilities, and overall proficiency in integrating AI into their accounting practices.
At Astranti, our expertise lies in providing specialised AI training for accountancy firms and individual accountants. We offer a range of options, from free online on-demand CPD courses to personalised, in-house training.
We firmly believe that everyone in the accountancy industry should grasp the fundamental principles of AI and understand how to integrate it into their day-to-day operations.
If you’re already contemplating the impact of AI on the industry while browsing this page, you’re two steps ahead!
We hope this page has addressed any lingering questions you may have about AI in accounting. Should you still have more, feel free to post them in the comments below, and we’ll get back to you.