Is AI the future of accountancy?

The business world is already agog with the power of ChatGPT and Bard, released respectively by Microsoft-backed OpenAI, and Google. We’ve seen hundreds of short courses and expert guides released already on how to harness their power for your business, so it seems inevitable that AI will indeed be the future of industry. The key questions are how, when, and to what extent will it affect the accountancy sector?

There are two potential aspects of AI that will impact the sector. First and foremost, it will be in how we run and operate our own businesses, and practices. The focus will be on streamlining systems, making efficiency gains, and boosting productivity, by using predictive analysis to overtake repetitive and process-driven tasks. Second, it will affect the financial functions and capabilities of accountants within their role, replacing some of the current-day labour and functions. Ultimately, it is all related to AI model maturity, with current development focusing on broad application solutions first, and industry specifics second.

ChatGPT and Bard, which have gained recent notoriety, are both “large language models” (LLM), which means that they rely on swathes of historic data and probability predictions in order to output appropriate text. The advantage of LLMs is that they can handle significant volumes of content and output something similar, which in practice will shortcut drafting of everything from emails to reports to presentations by predicting what you might want to say.

The disadvantage is that the text they rely on is historic, at least currently; they require appropriate question-asking; and they lack the application to handle real-time financial modelling and reporting. Roll ahead a few years, and inevitably the big providers of accountancy software will invest in accelerated AI programmes, designed to carry out core accountancy functions. In fact, we are already seeing some of this in many of the programmes, with automated input of invoices and bills for example, and even some predictive modelling.

When we think of AI, most of us automatically contemplate a science fiction future with automatons carrying out our basic functions. We’re guilty of basing our expectations on the imaginings of writers like Aasimov, or directors like Scott and Spielberg. But is that realistic? What most of these movies represent is a field of AI called “neuromorphic”, which means AI with an ability to mimic the brain. This field of study uses dedicated circuits whose sole focus is on learning rather than running programmes, and it is this that many people fear for ‘taking over their job’.

In reality, the majority of AI is in fact delivered through algorithmic programming, which focuses on AI executing a repeatable function, guided by a set of appropriate rules. It can ‘learn’, but it ultimately relies on the command that it is using, and the data to which it has access. We are all already embracing this kind of science, with algorithms running everything from search engines, to programme reporting, to our smartphones. When we consider it this way, and think about the realities of algorithmic programming, it isn’t so much a step into the future, as a maturing of systems we are already utilising.

For accountants, digitisation has gained significant momentum in the last decade. Making Tax Digital, cloud-based accounting software, and iXBRL filing have all heralded the advent of automated and semi-automated processes within accountancy. They are familiar, and a necessary part of the job function that we are handling every day. In fact, when the initial fear of autonomous accountancy robots wears off, what we realise is that we are on a continuum, utilising ever-more-sophisticated automations and predictive functions that support and enhance our job roles, and help us challenge other systemic industry challenges. We will have the time and space to respond and innovate, while also embracing the opportunities they present.

Ultimately, AI-driven automation, more comfortably termed digitisation, offers significant opportunity to accountants, freeing resource from mundane, repetitive tasks and redirecting it into trusted adviser activities which are so valued by businesses. New technological solutions mean that accountants can significantly boost their productivity and therefore margins, utilising the available time to tackle new commercial opportunities. For some practices this will present as the opportunity to acquire more clients without grappling with the challenges of recruitment. For others it will manifest in the launch of new services and value-adds, such as budgeting and costing, forecasting, strategic planning, investment appraisal, cashflow management, and environmental analysis. This provides significant scope for differentiation.

The other significant advantage of digitisation is the opportunity to better interrogate data. Digital systems are typically cloud-based, offering real-time insights into business performance that can be shared between accountant and client. Accountants can embrace this recently accessible pool of data by offering client-focused services including data analysis, integrated reporting and flexible business modelling. It is about becoming a genuine strategic partner to clients, not just doing their books and ensuring regulatory compliance, but helping drive the business forward.

One final consideration that will ultimately impact the adoption of AI within the accountancy sector, is our reality of regulatory oversight. It means that AI cannot simply be adopted and given carte blanche to carry out our financial responsibilities. It must be governed, regulated, and safeguarded to ensure that regulatory compliance remains a capability for businesses. This will inevitably slow its roll-out. Ultimately, the future of our sector depends on our willingness and ability to innovate. AI tools present significant opportunity, and the savvy among us will implement continuous improvement and ensure we are trained, ready, and willing to use the latest technology to our advantage. I for one am excited for what lies ahead.