Artificial intelligence

AI is revolutionising accountancy by automating routine tasks, enhancing data analysis and providing valuable insights for strategic decision-making. Conor Flanagan explains how Artificial intelligence (AI) has emerged as a transformative force across various industries and accountancy is no exception. As AI technologies advance, they are reshaping the accounting landscape by enhancing efficiency, accuracy and strategic decision-making.  The emergence of AI can be traced back to the 1950s when pioneers like Alan Turing began exploring the concept of machine intelligence.  Turing’s famous “Turing Test” proposed that a machine could be considered intelligent if it could engage in conversation with a human without being distinguishable from a human interlocutor. Since the 1950s, AI has continued to evolve through different phases, including the notable period in the 1970s known as the “AI Winter” when there was a significant fall-off in funding and interest in the technology.  Since then, and coinciding with advances in computational power coupled with the development of machine learning algorithms, interest in AI has been reignited, with breakthroughs in natural language processing, computer vision and data analytics paving the way for more practical applications.  This progress, although impressive, has been somewhat dwarfed by the advent of Generative AI in recent years, with companies like OpenAI and its now infamous ChatGPT platform sparking widespread interest in the technology and its potential.  Generative AI has given rise to exciting new systems now capable of performing complex tasks, such as image recognition, language translation and content creation. And for the sceptics among us – no, this article was not written by ChatGPT. The Microsoft experience AI is revolutionising accountancy by automating routine tasks, enhancing data analysis and providing valuable insights for strategic decision-making. At the recent Chartered Accountant Technology Conference, held in January 2024, Daragh Hennelly, Senior Finance Director with Microsoft in Ireland, shared the story of how the company is unlocking business value through AI-enabled outcomes in finance. Microsoft began its AI journey over seven years ago, leveraging traditional AI to create models that could recognise patterns in data and use this to predict and act on potential outcomes, driving significant efficiency gains. Some examples include: Task automation and content creation Microsoft is using AI to automate tasks such as setting up purchase orders and logging expense reports. Streamlining processes and reducing risks Invoice approvals: AI assigns real-time risk scores to automate more than one million low-risk invoices and cuts the manual effort required for the rest by 50 percent, resulting in 125,000 hours of time saved for finance team members who can now use that time to focus on more strategic tasks. Journal entry anomaly detection: Machine learning algorithms have been built to review thousands of journal entries to detect anomalies with the aim of reducing reporting risks or misstatements.  Enhancing contract review efficiency: AI reads and scores thousands of contracts, reducing the time needed for manual review by 50 percent and allowing finance professionals to focus on high-risk contracts. The recurring theme in all these examples is how AI can be deployed to either automate manual tasks previously carried out by Microsoft’s finance team or unearth and present anomalies requiring additional review.  This demonstrates how AI can create efficiencies in finance functions and processes, but as accountants, we still need to be professionally trained to make decisions based on a smaller and more focused sample base.Over the past 18 months, in particular, the opportunity to transform business and finance processes has accelerated with the roll-out of Generative AI and its ability to create original content – such as text, images, video, audio or software code – in response to user prompts and requests. Today, Microsoft is adopting Generative AI to further enhance processes and unlock business value. This opportunity can be categorised across four main areas: Summarise information. Generate content. Recommend actions. Simplify tasks. 1. Summarise information Recap meeting transcripts to capture key points and assign actions. Distil collection agents’ call notes into actionable plans. Flag key terms in contracts related to payments, pricing and discounts. Synthesise complex workflow documents to highlight handoffs and commonalities. Summarise earnings scripts to identify significant trends and highlights. 2. Generate content Draft financial close decks and write analytical comments and insights. Write contractual language based on simple notes. Draft collection calls and follow-up emails in different languages with payment plan details. Write initial internal audit reports and investor relations earnings call scripts. Produce market sentiment analysis using transcripts from corporate earnings calls and central banking authorities. 3. Recommend actions Analyse financial close variances and recommend areas of the business to investigate variance drivers. Define collection strategy based on customer payment history. Evaluate audit workpapers and resolution disputes against audit controls.  Guide users in setting up purchase orders, invoices, expenses and payments. Recommend policy adherence within workflows. 4. Simplify tasks Accelerate financing requests by automating credit checks and policy reviews. Review sourcing contracts to ensure compliance and reduce human error.  Automate Sarbanes-Oxley Act (SOX) operational controls and summarise insights. Prioritise collection emails, tag disputes and identify resolution owners. Streamline tax and customs procedures by identifying compliance obligations from different global jurisdictions. Central to the success of this transformation of finance at Microsoft is a strong culture of encouraging and rewarding employees to leverage new technologies to transform finance processes. As Amy Hood, Microsoft’s Executive Vice President and Chief Financial Officer, puts it, “by adopting innovative technologies, finance will strengthen its business leadership through compliance, accuracy and efficiency.”   Microsoft is at the forefront of the Generative AI wave, advancing ideas of what is possible and investing in AI solutions such as CoPilot. CoPilot is integrated into Microsoft’s applications (Word, Excel, PowerPoint, Outlook and Teams), working alongside the user with the aim of helping them to work more creatively and efficiently.  It is also enhancing business application products such as Power Platform, Business Central and Dynamics Sales, facilitating advanced data analytics and the creation of complex workflows using natural language that would previously have required the intervention of a developer.  AI’s other early adopters Outside Microsoft, there are other examples of organisations that have successfully implemented AI in their accounting processes, demonstrating the technology’s practical benefits in our field.  HSBC The multinational banking and financial services company has implemented AI to enhance its fraud detection capabilities. HSBC’s AI system analyses transaction data in real-time, identifying suspicious activities and flagging potential fraud cases. This has resulted in a substantial reduction in fraudulent transactions and improved security for customers. Xero The cloud-based accounting software provider uses AI to automate bookkeeping and financial reporting tasks for small and medium-sized businesses. Xero’s AI-driven platform can categorise transactions, reconcile bank statements and generate financial reports, saving time and reducing the risk of errors for business owners. AI and ethical risk While AI offers numerous benefits to the accounting profession, it also raises some ethical concerns. These issues must be carefully considered to ensure the responsible use of AI in accountancy. Data privacy and security AI systems rely on vast amounts of data to function effectively. This raises concerns about data privacy and security, as sensitive financial information may be at risk of unauthorised access or misuse. Organisations must implement robust data protection measures to safeguard against data breaches and ensure compliance with privacy regulations. Bias and fairness AI algorithms are only as unbiased as the data they are trained on. If the training data contains biases, the AI system may produce biased or unfair outcomes. This is particularly concerning in areas such as fraud detection and financial forecasting, where biased algorithms could lead to discriminatory practices. It is essential to ensure that AI systems are trained on diverse and representative datasets to minimise bias and promote fairness. Transparency and accountability AI systems often operate as “black boxes,” making it difficult to understand how they arrive at their decisions. This lack of transparency can be problematic in the context of financial reporting and auditing, where accountability is crucial. Organisations must strive to develop explainable AI models that provide clear insights into their decision-making processes. AI and the work of the accountant The automation of routine accounting tasks through AI has raised concerns about job displacement and the future of the accounting profession.  While AI can handle repetitive and mundane tasks, it cannot replace the strategic thinking and judgment accountants bring to the table.  That said, accountants may need to adapt to new roles and develop new skills to remain relevant in an AI-driven landscape. Like electricity, the roll-out of AI will have a major impact on every industry and many professions, but only those who embrace it will learn to harness its power. Accountants must be prepared to adapt to the changing landscape by acquiring new skills and knowledge. Continuous learning and professional development will be essential for accountants to thrive in an AI-driven world. This includes gaining proficiency in data analytics, machine learning and other emerging technologies. Rather than viewing AI as a threat, accountants should embrace it as a valuable tool that can augment their capabilities. By leveraging AI to handle routine tasks, accountants can focus on higher-value activities, such as strategic planning, financial analysis and advisory services. AI is undeniably transforming the field of accountancy, offering numerous benefits in terms of efficiency, accuracy and strategic decision-making.  From automated data entry and fraud detection to financial forecasting and auditing, AI is revolutionising traditional accounting processes. Its widespread adoption also raises important ethical questions, however. To fully realise the potential of AI while addressing this challenge, organisations must prioritise ethical considerations while also investing in reskilling and upskilling their people and fostering collaboration between humans and AI.  By doing so, the accounting profession can harness the power of AI to drive innovation and deliver greater value to clients and stakeholders. If you have found this article interesting, join us for the next Chartered Accountants Ireland Technology Conference on Friday 24 January 2025. Conor Flanagan is ERP Lead with Storm Technology and a member of the Technology Committee of Chartered Accountants Ireland

The European Union’s new Artificial Intelligence Act brings opportunities for businesses but will not be without challenge, writes Keith Power Just seven percent of Irish businesses currently have governance structures in place for artificial intelligence (AI) or generative AI (GenAI). Despite this, the overwhelming majority (91%) believe that GenAI will increase cybersecurity risks in the year ahead. This is according to PwC’s latest GenAI Business Leaders survey, published in June 2024.  The European Union’s Artificial Intelligence Act (EU AI Act) is a sweeping new regulation aimed at ensuring that businesses have the appropriate AI governance and control mechanisms in place to deliver safe and secure outcomes.  Indeed, a large majority (84%) of our survey respondents welcomed the introduction of the EU AI Act, saying regulation is necessary to prevent the potential negative impact of AI in the future.  The new EU AI Act will also bring challenges, however. Its aim is to protect businesses, consumers and citizens in the EU from potential risks associated with AI in terms of health, safety, fundamental rights, democracy, rule of law and the environment.  By introducing standards and providing legal certainty, the Act also seeks to foster innovation, growth and competitiveness in the EU’s internal market.  It is the EU’s first comprehensive legal framework for AI and will level the playing field for businesses using the technology.  The Act adopts a risk-based approach, with its biggest compliance requirements applying to “high risk” AI systems.  These requirements include addressing data governance concerns, mitigating bias, ensuring transparency and implementing a system of quality management.  The Act also requires that users must be informed when they are interacting with chatbots, and that any AI-generated content must be clearly identifiable as such.   Several specific risks are particular to the EU AI Act, including failure to identify all uses of AI across a business as well as the potential for the inaccurate risk classification of AI uses.  The Act also obliges organisations to assess all of their use cases for AI. This may prove an onerous and time-consuming task given the dispersed nature of the use of AI in many companies. The risk of misclassification is high as risk classifications may change as an organisation’s use of AI evolves over time.  This necessitates the implementation of appropriate ongoing governance and control procedures to maintain compliance, bringing its own challenges. There is also a risk that the focus on compliance may lead to a drag on innovation.  The nuanced nature of some of the language used in the Act, coupled with risk classifications and role designations being subject to change, may prove problematic for some organisations.  The use of AI systems by third parties acting on behalf of organisations may also cause a degree of complexity.  There is much to be considered by Irish businesses to ensure they will be compliant with the new EU AI Act.  It will bring competitive opportunities, but complying with the new regulations will be a complex process. Keith Power is a Partner with PwC Ireland *Disclaimer: The views expressed in this column published in the August/September 2024 issue of Accountancy Ireland are the author’s own. The views of contributors to Accountancy Ireland may differ from official Institute policies and do not reflect the views of Chartered Accountants Ireland, its Council, its committees, or the editor.

Numra co-founder David Kearney, FCA, sees a world of potential in the advent of AI for accountants who can now expect to see their work move up the value chain David Kearney vividly recalls the release of the first version of ChatGPT, the artificial intelligence (AI) chatbot, by US tech firm OpenAI in November 2022. A Chartered Accountant, entrepreneur and self-confessed “techie,” Kearney had sold Peblo, his first start-up, just months earlier and was on the look-out for ideas for a new venture with global potential. “That first ChatGPT release was really the first time I’d come across the concept and capabilities of generative AI (GenAI) and large language models (LLMs),” Kearney says. “It was all I could think about at the time. I remember spending a full week of evenings staying up late just playing with ChatGPT, getting to know it, reading all about GenAI and LLMs and learning about how it all works. I was fascinated.” Almost immediately, based on his own experience as a Chartered Accountant, Kearney could see a potential commercial application for the technology in the professional field he was most familiar with. “There are literally dozens of use cases out there for GenAI. The one I zeroed in on was accountancy,” he explains.  Kearney established Numra in August 2023 and, alongside his co-founder Conor Digan, began to develop an AI-powered automation platform for finance teams.  Numra closed a €1.5 million seed funding round in December led by Elkstone Partners, the early-stage venture capital firm, and released the first version of “Mary,” its AI assistant for finance teams. Numra’s AI platform is aimed primarily at mid-sized companies with in-house finance teams processing high-volume transactions. “One of the biggest things Mary can help these teams with is workflow automation. She excels at repetitive tasks, such as invoice processing, three-way matching, payments and reconciliations,” Kearney explains. “If we take accounts payable as an example, Mary can identify an invoice from an email, extract the required invoice data and enter it into the accounting system. She can then send the invoice to whomever needs to approve it and, from there, she can execute the payment.” Kearney says Mary has been designed to behave like a “real-life team member.” She can be trained up on existing company processes and can interact with communication platforms already in use, such as email, Microsoft Teams and Slack.  “You onboard Mary, just like a normal team member. You train her on your internal processes, you give her access to your systems and then get her to start helping you with your workload,” he says. “She can manage complex tasks like answering vendor queries and performing detailed cost allocations, improving over time through user feedback. “That’s really the beauty of GenAI. It has this capability to ingest and process vast amounts of unstructured data and take on tasks that were previously too complex to automate.” The result, Kearney says, is that the role of the Chartered Accountant will be elevated with a new focus on higher-value activities that require strategic thinking and creativity. “There has been quite a lot of fear mongering around how AI is going to impact jobs in the future, including jobs in the accounting profession,” he says. “That’s kind of understandable, but AI actually represents more of an opportunity than a risk for accountants and other professions. I think it should be embraced.” Kearney began his own career as a Chartered Accountant as an undergraduate studying commerce at UCD. He undertook a one-year placement with PwC and went on to train in the firm’s audit department. “The Chartered Accountant qualification had been on my radar for a long time and I specialised in accounting in my final year at college to get the CAP1 exemption,” he explains. “I always had a very strong interest in business and entrepreneurship and I felt that the Chartered Accountant qualification would be a really good launchpad for my career. It’s very dynamic and it gives you a lot of career options.”  After qualifying, Kearney moved to southeastern Australia in 2018 where he spent three-and-a-half years in Melbourne working for large-scale organisations like PZ Cussons, RACV and National Australia Bank.  “I worked in finance departments, mainly in financial planning and analysis. I had an amazing time and built up some great experience in commercial roles, but it was always in the back of my mind that I wanted to do something for myself,” he says. After returning to Ireland with his partner Grace in the early stages of the COVID-19 pandemic, Kearney hit upon the idea for Peblo, his first venture.  Peblo was a financing platform for content creators and influencers. Kearney established the start-up in late 2020 with co-founder Jake Browne and sold Peblo less than two years later to Wayflyer, the Irish-owned e-commerce funding platform. “Peblo was a bit of a crazy idea. It was an invoice factoring company for influencers and their talent agencies.  We were basically buying sponsorship invoices from influencers, so they could get paid sooner for sponsored work for brands. It took off. It grew legs really quickly and we sold in early 2022.” Peblo’s rapid growth and early acquisition was like “lightning in a bottle,” Kearney says now. “It’s rare enough that a start-up would scale that quickly and attract interest from a buyer,” he says. “It was good timing, a good value proposition. Sometimes things just work out.” Peblo may have taken off at lightning speed, but Kearney’s interest in technology goes right back to childhood. “One of my earliest memories is of my grandad’s Apple Macintosh computer. That was back in the early nineties. I was glued to the thing every time we visited and he ended up gifting it to me before I had even started primary school.  “I must have been about four and I still remember the excitement. Since then, I’ve been a bit of an early adopter of new technology. I love trying new things. Technology has always been a big part of my life.” Now, with Numra’s seed funding round secured, Kearney has ambitious plans for the fledgling venture. “We’ll use the funding to accelerate customer acquisition in the US and to invest further in product development,” he says. “Our main target market will be the finance teams in mid-sized organisations. These teams often have too much work and too few heads. They are the most likely to recognise, and benefit from, this kind of AI-enabled workflow automation from the get-go.” For Chartered Accountants fearful that the advent of such automated financial platforms could upend the profession, Kearney says the critical role the profession plays across all sectors will not be replaced. Rather, it will evolve. “The data entry, the document processing and the ‘number-crunching’ is going to go away. AI can do all of that better than we can,” he says. “AI is very good at doing a lot of the time-consuming work people don’t tend to enjoy and that is a positive for Chartered Accountants who can instead start to focus on more valuable strategic work. “Ultimately, I think we can expect to see the day-to-day work of Chartered Accountants move away from ‘the doing’ and more towards orchestrating and reviewing.”