Artificial intelligence (AI) is the branch of computer science concerned with making computers behave like humans. AI refers to the ability of machines to perform cognitive tasks like thinking, perceiving, learning, problem solving and decision making. AI refers to the ability of machines to perform cognitive tasks like thinking, perceiving, learning, problem solving and decision making. Initially conceived as a technology that could mimic human intelligence. AI has evolved in ways that far exceed its original conception. With incredible advances made in data collection, processing and computation power, intelligent systems can now be deployed to take over a variety of tasks, enable connectivity and enhance productivity. Robotics is a branch of AI, which is composed of Electrical Engineering, Mechanical Engineering, and Computer Science for designing, construction, and application of robots.
As AI’s capabilities have dramatically expanded, so have its utility in a growing number of fields. Recent advances in artificial intelligence (AI) are leading to the emergence of a new class of robot. These are machines that go beyond the traditional bots running preprogrammed motions; these are robots that can see, learn, think, and react to their surroundings. Machine learning, deep learning, and natural language processing are subcategories of AI. Furthermore, we can consider robotics as a subcategory of AI. Thus, it indicates that AI is a vast area that covers many aspects. Moreover, there are various applications of AI, such as games, self-driving cars, and robots.
The Flip Side
The 1984 movie, The Terminator, portrays a dystopian future where robots and intelligent machines seize control of the world. In the movie, an intelligent killer robot — a terminator — is sent back in time from the early-21st century to change history. Now clearly, none of that has come even close to coming true, but what is clear is that technology will disrupt our future in ways we can’t yet predict. The idea that “the robots are coming for our jobs” is one disassociated from the reality of these technologies. That said, it’s a fact that accounting is changing.
The salient question is how AI is changing accounting, how AI innovation can change accounting jobs, and what accountants need to do to thrive during this digital revolution?
Automated Accounting-the Perspective
· Perhaps the most pessimistic view of the future of accounting comes from a website tool developed by Deloitte and Oxford University that predicts the likelihood that a robot will take your job. According to that tool, accountants have a 95% chance of losing their jobs to robots.
· Taking a more optimistic view, a study by the Brookings Institution predicted that occupations with a high percentage of repetitive tasks may be at a high risk of automation, while those that require a high level of education — such as accountants — will be pretty safe. However, a later study by that same Brookings team found that advances in artificial intelligence may make better-paid and better-educated workers the most vulnerable.
Impact of Automation on Accounting
Until the advent of computers and Excel, most accountants did their work pretty much the same way as double-entry bookkeeping in 1494. Ledger sheets, pens, and adding machines were the tools of the trade. The development of QuickBooks in the early 1990s put computerized bookkeeping within the reach of small businesses who couldn’t afford the expensive mainframe computers and ERPs used by finance departments at Fortune 500 companies.
Now, thanks to accounting workflow automation, bookkeepers don’t need to spend hours and days on data entry when bank feeds can pull financial data into an accounting system in minutes. Automation streamlines processes and converts inefficient, error-prone, labor-intensive processes into efficient, error-free processes that need very little human intervention. Automation doesn’t just save time, but it also gives you more accurate numbers. Real-time updates mean that business owners always know what their numbers are. Automation in accounting has been made easier by the development of APIs, or application programming interfaces, which allow different pieces of software to interact with your accounting system. Before APIs, connecting two systems often required coding. Now, you can largely plug and play to create automated workflows quickly and easily. Applications like Expensify and Dext use APIs to push data from PDFs and photos of invoices and receipts into the general ledger. APIs also make bank feeds possible, so that transactions from bank accounts and credit cards can be directly downloaded into an accounting system.
Accounting firms use automation to extract information from tax documents and import it directly into tax returns. Finance professionals use automation to extract data from contracts and leases to create the journal entries and footnotes required by accounting standards. Business owners use automation to keep an eye on their business needs in real time. Today, many accounting tasks can be automated, as this graphic from McKinsey shows:
Automation can be something as simple as setting up rules in your accounting software to classify transactions that come in via bank feeds. The next step up is adding software applications to handle specific accounting tasks and to automate entire business processes. One example is order to cash software, which can grab orders from a customer portal, and route that information to the correct places for order fulfilment, customer invoicing, and collecting payments. This type of rule-based software is an example of robotic process automation, or RPA. RPA is like an Excel macro, but more powerful.
Automation towards AI in Accounting Jobs
We are now entering into the domain where some automation software leverages artificial intelligence and machine learning to expand its functionality beyond programmed rules. In machine learning, access to a large database of knowledge or accounting transactions allows the technology to figure out the patterns in that data and improve its decision-making, with perhaps minimal correction from humans. Cash flow forecasting software such as Jirav or Helm are examples of this.
Benefits of AI for Accounting
The most common use for AI in accounting is to take care of repetitive tasks. For example, AI systems can capably, and with minimal error, complete tasks that include the following:
· Inputting and matching data
· Receipt reconciliation
· Creating and sending invoices
· Expense reports
· Tracking price changes
· Account reconciliation
· Sorting transactions
· Data recording and reporting
AI is built on algorithms, which improve over time as they are fed more data. In addition to continuous improvement, AI isn’t susceptible to human error and has around-the-clock capacity to work.
Three of the primary benefits experts see AI providing to accountants are:
1. Invisible accounting: A behind-the-scenes function that frees up human accountants to engage more with strategic decision-making
2. Continuous auditing: Auditing without the need for breaks and with no gaps in reason or precision
3. Active insight: Accounting managers and leaders can get real-time visibility into their finances.
Will Robots Replace Accountants? Low Value vs, High Value Jobs
Automation gives accountants the time and bandwidth to do more interesting work and to add value. They won’t be spending as much time on the low-value work that has to be done before the high-value work can be started. When they can trust that the numbers are correct and up-to-date, combining accounting information with data from different parts of the business and applying data analytics helps them see patterns the naked eye can’t. Those kinds of high-value work are what business leaders need as input for the decision-making process, and it’s what provides those leaders with the actionable insights they need to move their businesses ahead of the competition.
This means that accountants will need to upgrade their skill sets and learn to use different tools. Being the fastest and most accurate with a ten-key will no longer be a prized skill, but being the one who can use data analytics tools and other new technologies to extract useful insights to improve your company’s operations will make you highly sought after.
It has been indicated that within five years, about 90% of finance functions should be fully automated, according to a 2020 survey of CFOs by Grant Thornton. As you can see from the figure below, accounts payable is the most automated function, with 61% of respondents having that currently implemented. In five years, 96% expect to have that fully implemented.
“Will AI reduce the need for accountants? I think the answer is probably yes,” says Richard Anning, head of ICAEW’s IT Faculty. “But you have to define what an accountant is. If you’re looking at some of the more repetitive bookkeeping or process-driven tasks, those are more likely to be subject to automation than the higher value tasks,” he says.
Michael Whitmire, CEO and co-founder of FloQast, an accountancy software startup based in Los Angeles, agrees: “Accounting departments overall will be trimmed down and the employees left will be able to focus on more strategic initiatives, like process improvement, cost control, and capital optimization. AI is already beginning to automate tedious tasks such as data entry. Automation is occurring at the staff level, but it will creep up the corporate ladder and begin to automate higher level accounting jobs,” he says.
The Future of Accounting Technology
One of the major changes to the accountancy profession as a whole is likely to be how services are valued and priced. Because manual tasks are also time-intensive, many accountants price their services based on how long they take. Amy Vetter, CPA and Technology Innovations Taskforce Leader for the AICPA’s Information Management Technology Assurance (IMTA) Executive Committee, argues that automation technology will push accountants to price services with a more value-centric model.
This suggests that the value of data entry-related tasks is likely to go down while the value of accountants’ insight and recommendations will rise. A report from The Association of Accountants and Financial Professionals in Business suggests that this is actually an opportunity, arguing that accountants are uniquely positioned to be change agents who drive the direction of technology investment for their organizations. The report also identified the top technologies likely to shape the future of accounting, which include:
· Mobile accounting
· Big data
· Artificial intelligence and robotics
· Educational technologies
· Cloud computing
· Payment systems
· Digital Service delivery
While the report cited above focuses on accounting for business, many of these technologies will have far-reaching effects across the accountancy profession. For example, all accountants could benefit from keeping an eye toward digital service delivery, whether this takes the form of engaging more clients online, leveraging secure cloud storage services for clients to share documents or another innovation that enhances the client experience.
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The Future of Accountants in AI Era
Although artificial intelligence made considerable leaps in the past several years, these advances have not damaged the growth of accounting jobs. The Bureau of Labor Statistics projects 10% growth (faster than average) for accountants and auditors from 2016-2026. The growth is at least partially due to the complexity of the job, which includes many responsibilities that AI is unable to do—skills like making strategic business decisions and understanding a complex regulatory environment remain in high demand for accountancy.
While news stories like this one like to put artificial intelligence and accountants against each other, the future isn’t either AI or human accountants. It’s both. Like other automation technologies (e.g., cloud computing), AI will change the focus of accountants’ roles. As Forbes Technology Council Member Mike Galarza suggested in a 2017 article, the rise of AI will create more value for accountants who develop their interpersonal skills, such as their ability to communicate complex requirements and develop strategies for their clients.
“Accountants should evolve to become business advisers and strategists who help drive long-term business strategy — making sense of complex financial infrastructure and interpreting increasingly fluid tax law,” Galarza wrote.
Of course, remaining competitive in a highly dynamic job market is not without its challenges. The exponential advances made in the technology sector will require that accountants continue to develop not only their key domain skills, but also understand and stay current with the technology disruptions likely to impact their work.
How to Future-Proof Your Accounting Career?
AI is best at replacing manual tasks and alleviating the burden of repetition. However, much of bookkeeping exists in that realm. Development of skill sets to cope with the changing scenario with following adoptions can help in the process.
1. Gain Practical Accounting Experience Backed by Theoretical Context
One of the key skills still missing from artificial intelligence in general is the contextual awareness to determine the best response to a given situation. For example, AI may be able to process thousands of documents within a few minutes and identify quantitative trends, but AI can’t yet make recommendations based on this information. Accountants equipped with analytics and AI, alongside an understanding of accountancy practices and knowledge of their organizations, will be able to fill this gap. Extensive accountancy domain knowledge will always be essential, but the future of accountancy will also make it important to think beyond completing a rote set of tasks. Instead, all accountants should push themselves to understand the “why” element, and challenge assumptions as to whether their current approach is the best one for their organizations or their clients.
2. Develop Communication and Business Skills
As the accountant’s role becomes more focused on decision-making, strategy and planning, there will be a premium on communication and business skills. In addition to being able to look at quantitative data through a strategic lens, communicating recommendations such as why clients should follow a particular course of action will be a powerful asset in the future of accounting careers. As Robert Half noted in 2018, communication skills are important to employers who are looking for “accounting professionals with a collaborative personality, an executive presence, conflict management and adaptability.”
3. Learn from the International Professional Accounting Courses
It is quite evident that courses like CMAs, CPAs, CIA, EA etc. and other credentialed accounting professionals already aim for roles where they make strategic decisions. Bookkeepers may represent a group that feels more at risk for an AI takeover. One way accounting and finance professionals can show their interest in growing and learning about new technology is by pursuing specialized certifications like the Certified Management Accountant (US CMA) certification. It focuses on developing the skills technology alone can’t do i.e., managing and developing people as well as decision-making, planning, and creativity. The CMA exam is structured in two parts, with an emphasis on how to influence key decision-makers, how to extract actionable insights from data, and how to become a business partner.
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While technology changes like these have never been as dire as news headlines portray them, they do have the potential to change the accounting career landscape. In a world where AI is sophisticated enough to process most of the information that accountants deal with every day, for example, there will be less focus on data entry tasks and more emphasis on accountants’ role in strategic decision-making and long-term planning. Like other professions affected by AI, accountants will need to transform the way they position themselves and communicate with their clients. Given the growth in AI and other advances, modern accountants will be driven to become more tech savvy and position themselves as strategic partners for their clients and their employers.
One cannot deny the fact that this revolution of AI in accounting is not going to slow down in any way. No doubt AI technology has the potential to perform all mundane tasks of accountants. But technological changes cannot replace humans in any situation as human intelligence will always be required to perform and efficiently run technology.
The accountants are needed by the firms for interpreting and analyzing data captured by AI-powered machines. Moreover, accountants will play a major role in doing higher-order task consulting services better than machines. Rather than spending unnecessary time performing repetitive tasks, they can invest their time and focus on general tasks like data analysis and consulting services. Therefore, rather than replacing accountants, artificial intelligence helps accountants to do their regular tasks in a more technologically advanced manner. The key to the digital transformation of accounting and financing is pairing people and machines together allowing each one to contribute in areas they are best skilled at.
Uplift Professionals, a premier training Institute for global professional accounting courses and a partner of IMA(US), helps to make “Future-Proof” accountants by giving quality training to the aspirants to pass US CMA, CPA, Enrolled Agents, etc. exams in the most student friendly manner.
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