Introduction:
Artificial intelligence (AI) has emerged as a transformative technology across various industries, and the field of accounting is no exception. Small to medium-sized accounting firms are beginning to recognise the potential of AI in streamlining their operations, enhancing efficiency, and improving client services. This article delves into the ways in which AI is poised to revolutionise the landscape for these firms.
Automating Mundane Tasks:
One of the significant advantages of AI for small to medium accounting firms is its ability to automate mundane and repetitive tasks. AI-powered software can efficiently handle tasks such as data entry, reconciliations, and invoice processing, which previously required considerable time and effort from accountants. By automating these tasks, accountants can focus on more strategic and value-added activities, such as financial analysis and advisory services.
Enhanced Data Accuracy and Compliance:
Accuracy is paramount in accounting, and AI can significantly contribute to ensuring error-free operations. AI algorithms can analyse large volumes of financial data quickly and accurately, minimising the risk of human error. This leads to more reliable financial reporting, improved compliance with regulations, and reduced auditing costs for small to medium accounting firms.
Improved Decision-Making:
AI-powered analytics can provide accountants with valuable insights by identifying patterns and trends in financial data. This enables them to make data-driven decisions and offer strategic advice to clients. AI algorithms can also assist in forecasting future financial outcomes, helping small to medium firms better plan and optimise their financial strategies.
Enhanced Client Experience:
AI-driven chatbots and virtual assistants can revolutionize client interactions for small to medium accounting firms. These AI-powered tools can handle routine client queries, provide real-time support, and even offer personalised financial advice. By automating customer service, accountants can focus on building stronger client relationships and providing more specialized services.
The Human Touch
What are your thoughts on this article so far? Everything up to now was written by Chat GPT!
I asked it to write a 300 word article on the impact of AI on small and medium accounting firms and this is what it wrote in less than a minute. I removed the machine’s conclusion because I will take up the story now. The article so far may be a bit generic, but it is accurate, readable, and if follows a logical sequence. This development should give us all pause for thought. Clearly this has to potential to effect profound changes to how we do our work, but we are all still trying to peer into the future and guess exactly how this will happen. One can ask is this the future, where does the human element fit into the ever-evolving developments of AI. Here are some further (human generated!) reflections on how AI will impact small to medium sized accountancy firms over the next number of years.
Chat GPT is the latest buzz word in the media over the last few months. However, it could be described as just a tree in the huge AI forest. AI has been around for several years; many of us remember when “Deep Blue” (IBM’s supercomputer) beat the world chess champion Garry Kasparov way back in 1996. However in more recent times, AI has been quietly changing the way that we do bookkeeping tasks, making suggestions for where to post and how to code invoices and payments, and automatically reconciling bank accounts. Most accountants will agree that AI will contribute to savings, reduce errors and aid compliance. This is turn will free up accountants, resulting in accountants getting to spend more time assisting clients to run their business rather than focusing on data entry and repetitive tasks.
Of course, there are risks and downsides. Firstly the use of generic AI packages may compromise client data. For example you should never input confidential or personal data to Chat GPT, which is not a secure platform. And of course, AI can get it wrong. Occasionally it will generate answers that appear logical, and may even be backed up by references which are spurious; this is known as hallucinating and it can be difficult to spot. The opportunities for training of junior staff may be reduced as AI can readily take over simpler tasks. There are also ethical risks. AI may enable people to pretend to have knowledge and insights that they do not have. This can result in poor advice given to clients, and in extreme cases it facilitates fraud.
Many firms are already investing in AI and there is a premium in being able to respond quickly to technological changes and to grasp opportunities. Consider how you will find the right of mix of AI products and capabilities, and choose what you want to build, buy or partner. This is coming at a time when the recruitment market for accountants and book-keepers is getting continuously tighter. Is AI the solution, or part of the solution, to the never-ending staff crisis? Time will tell.
Here are some areas where we think we may see practical changes.
Firstly the tasks of writing reports, letters, summarising reports, and creating presentations are greatly facilitated. Like the first part of the article above, Chat GPT or similar applications will create a first draft of these almost instantaneously. Where you are struggling for words, try asking it to “write this more professionally for me”, and enter your own text to see what it suggests. These capabilities are available now, and for free. However, remember the previous warning about not entering confidential information to ChatGPT.
We understand that Microsoft is currently rolling out an AI add-in called Co-Pilot which they say will ultimately be available to all Microsoft 365 users. The premise is that you will be able to, say, ask Co-Pilot how you should prepare for your upcoming meeting and it will create an agenda and content for you based on your current activity. And of course Co-Pilot should know how to use all the features in all the Microsoft apps that you never use! No doubt, Microsoft’s competitors will produce rival solutions. There are a number of plug ins available for standard spreadsheet programs that will analyse data and write natural language reports on your data. The idea is that you can ask the program, for example, to analyse results for the past three years, identify key trends and draft a graph to illustrate this.
Tax compliance is another area where the technology seems to be progressing quickly. Current developments point to software that will review your tax client portfolio and suggest where you may have overlooked available tax reliefs and credits and draft the relevant correspondence to Revenue. We await the outcome of these developments here with interest.
Audit is another area where the opportunities to carry out large scale reviews of data and generate documentation should transform processes over time.
Of course, the difficulty with trying to anticipate future technological changes is that it is not clear what problems are readily solvable until after they are solved. Like the self-driving functions on high end cars, the advice is to use the technology to help you, but keep your hands on the steering wheel for now! Always proceed with caution, and do a common-sense check on anything that you produce using AI. In the meantime, stay alert for the opportunities that these technologies can create for you practice.
The human part of the above article was written by Maria Moloney FCA, who has joined Practice Consulting as a consultant.
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