Artificial Intelligence and the Future of Accountancy

Artificial intelligence, sometimes called machine intelligence, is evolving quickly in the accountancy industry. Having been referred to by Bill Gates as computer science’s “Holy Grail,” AI has a lot to live up to in the years ahead, bringing both benefits and risks to the world as we know it. For better or for worse, AI is becoming popular in major industries. So it’s only a matter of time before it enters the field of accountancy.

Accountancy is the latest in a series of industries affected by the increasing use of artificial intelligence. AI has already entered sectors such as retail, tech, communications, energy and healthcare, and it informs many of our day-to-day interactions with technology without us even knowing.

AI provides outputs that are increasingly accurate and informed by human-data. In some cases, artificial intelligence looks as though it could far supersede human efforts in the future, although this is certainly a controversial topic.

One of the main draws of AI (and one of its most potent anxieties) is that artificially intelligent machines will someday replace the manual work of humans, freeing us up to concentrate on other tasks. So what opportunities and dangers does the impact of AI have in store for accountancy? Does AI stand to transform or disrupt the accounting profession?

Accounting: the past vs. the present and future

Unlike other industries, accounting hasn’t seen much in the way of innovation in the past few centuries. In fact, much of the work of an accountant has been reliant on archaic bookkeeping processes up until the last couple of decades. Recent years have seen major accounting software like Sage and Xero enter the market, making manual data entry seem like a thing of the past. The future of AI looks to introduce even more automation to the accounting sector, bringing both major opportunities and significant challenges.

AI in accountancy is already here

Although AI technologies like machine learning are nothing new, the pace of change has rapidly increased in the past decade alone. Adoption of AI technology in the accounting sector may be in its early stages, but it is still happening. Experts predict that by 2020, AI will be able to fully automate accounting tasks as well as other financial processes like tax audits, payroll and banking. This invites the question: will artificially intelligent machines ever replace human accountants?

Will AI replace human accountants?

One of the main concerns about artificial intelligence is that the skilled jobs many of us hold will cease to exist when machines can perform them better, or in less time.

Forrester research estimates that AI will take over up to 16% of jobs in the U.S., while Google believes that robots will achieve human intelligence levels by 2029. Gartner also estimates that smart robots will take over 33% of all occupations by 2025, but that it will create more jobs than it eliminates. According to these findings, the areas that will be most impacted are healthcare, manufacturing, transportation, customer service and the finance industry.

In a recent Forbes contribution, Stephanie Weil CEO of Accounteam, sums up this anxiety perfectly:

“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. 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.”

The main consensus, however, is that AI will not replace human-skilled professions like accountancy, but it could significantly improve accuracy and eliminate human error. AI can do incredible things already, but it can’t make decisions based on context. In short, AI lacks the human touch.

Accountancy is not just punching numbers

Professional accountants do more than just manage receipts, input data and pull up reports; they act as consultants who advise people on tax planning in multiple countries, discussing operations, reviewing client goals and much, much more.

So what does AI accounting look like in action, and what can artificially intelligent “robots” bring to the accountancy profession?

AI accountancy in action

Some accounting firms have fully embraced AI and are using the technology to give them a competitive edge. Smacc is a German-based software firm that uses artificial intelligence to help freelancers and small businesses automate their accounting systems. The founders developed the concept of Smacc after experiencing difficulties with their own accounting in the initial stages of their own startup.

Smacc’s clients transmit their receipts, which are encrypted and then converted into forms readable by machines. Over time, the system teaches itself to improve functions such as sales, expenses and invoice management to better aid the customer.

Why accountants must embrace artificial intelligence

There is little evidence to support the theory that AI will replace accountancy jobs in the near future. Instead, increased use of AI will allow accountants to focus on providing better decision support rather than on data gathering and manual analyses.

Accountants must also address the data bias risks, compliance risks, and privacy regulations of AI technology in their profession. These are areas that IT cannot address alone; so human accountants will continue to be required for the foreseeable future.

By embracing machine learning, accountants can shift from spending time on menial data preparation and analyses to the drawing of insights and further consulting with their clients. The expertise that accountants possess can also be used to serve other departments in the organization, as data entry and manual tasks take up less of their time.

AI and accountancy: what does the future hold?

AI is being developed by multiple accounting firms and will dramatically change the profession in the coming years. More than 80% of executives believe AI leads to a competitive advantage, and 79% think it will increase their company’s productivity, according to an MIT-Boston Consulting Group survey.

“What AI is doing is sort of a more sophisticated version of what spreadsheets do. The more analytic and decision-oriented computations, at least for the next 20 to 30 years, will still require humans”, Tom Davenport, Babson College professor.

Charles Groome

Charles Groome is a contributor to SmallBizStar.

Charles is a Digital Marketing Specialist and presently serves as Director of Marketing at Biz2Credit. Having worked with established companies and startups for most of his career, Charles brings powerful insights to the challenges of succeeding in the digital marketplace. Find him on Twitterand LinkedIn.

Email Charles at charles.groome@biz2credit.com
Charles Groome

Charles Groome

Charles Groome is a contributor to SmallBizStar. Charles is a Digital Marketing Specialist and presently serves as Director of Marketing at Biz2Credit. Having worked with established companies and startups for most of his career, Charles brings powerful insights to the challenges of succeeding in the digital marketplace. Find him on Twitter and LinkedIn. Email Charles at charles.groome@biz2credit.com